Malaysia Orders Bybit to Shut Down Local Operations

Highlights:

• Malaysia’s SC ordered Bybit to cease all operations due to regulatory non-compliance.
• Bybit hopes to reconnect with Malaysian users after securing the necessary licenses.
• Malaysia’s crypto laws recognize crypto as securities but not as legal tender.

Malaysia’s Securities Commission (SC) has ordered crypto exchange Bybit and its CEO, Ben Zhou, to suspend all operations within the country. The SC announced in its media release on Dec. 27 that it has initiated enforcement actions against Bybit for failing to obtain authorization to operate as a digital asset exchange (DAX) under local regulations.

The SC explained, “This decision comes after concerns about the platform’s compliance with local regulatory requirements and protecting investors’ interests.” According to Malaysia’s Capital Markets and Services Act 2007, operating a DAX without Recognized Market Operator (RMO) approval is unlawful. The SC emphasized the seriousness of this violation and the risks it poses to the public.

SC ordered the platform to cease all digital operations in Malaysia starting Dec. 11. The company was given 14 business days to comply. The order includes Bybit’s website and mobile applications. The company must also stop advertising to Malaysian investors and deactivate its local Telegram support group.

The SC made its decision three years after it added Bybit and Zhou to its Investor Alert List in July 2021. The list warns Malaysian investors to avoid unregistered entities and individuals. The SC also included other prominent platforms, such as Bitget and Atomic Wallet, for operating without proper registration.

🚨 🚨 You will start seeing “IP address restricted” on your Bybit apps.

Rumours say that Bybit is trying to get regulated, hence they will comply to SC orders restricting access for Malaysian users. pic.twitter.com/Mt3TePqrVV

— Bitcoin Malaya (@bitcoinmalaya) December 30, 2024

Bybit Faces Global Regulatory Hurdles and Operational Changes

Bybit’s regulatory challenges extend beyond Malaysia. Bybit recently revealed plans to halt withdrawal and custody services for French users. This will take effect starting Jan. 8, next year, due to increased oversight from French authorities. Established in 2017, Bybit ranks among the world’s leading cryptocurrency exchanges. According to CoinMarketCap, it manages over $16 billion in assets.

Bybit announced that it will terminate withdrawal and custody services in France starting January 8, 2025. Bybit will initiate a transfer of any remaining funds to Coinhouse (a regulated French crypto asset platform). https://t.co/RVD7rNr0xo

— Wu Blockchain (@WuBlockchain) December 17, 2024

Malaysia’s Crypto Regulatory Landscape

Malaysia does not consider crypto as legal tender. The Central Bank of Malaysia Act excludes crypto and only recognizes the ringgit as legal tender. The Act doesn’t ban crypto, but it limits legal tender to the ringgit. However, the Capital Markets and Services Order treats crypto as securities. This gives crypto a legal status in Malaysia’s financial system. 

The SC has urged investors to work only with approved RMOs. These operators meet strict legal and operational standards. The SC regulates them and enforces strict compliance. Malaysia has only six legally registered crypto exchanges. These include HATA Digital, Luno Malaysia, and MX Global. The other three are SINEGY DAX, Tokenize Technology, and Torum International. Organizers of unregistered coin offerings may face a fine of up to 10 million Malaysian ringgit (about $2.5 million) or up to 10 years in prison.

Bybit Hopes to Reconnect with Malaysian Investors After License Approval

Bybit confirmed the enforcement action on its Malaysian Telegram channel. They acknowledged the inconvenience this may cause users. The exchange hopes to reconnect with Malaysian investors in the future after obtaining licenses.

Bybit stated:

“We understand that this may cause some inconvenience. Once we have secured the appropriate licenses, we look forward to reconnecting with you again in the future.“