Malaysia’s Securities Commission (SC) has issued a directive to cryptocurrency exchange Bybit and its CEO Ben Zhou to halt all operations within the country. The move comes as a result of Bybit’s failure to obtain the necessary authorization to function as a digital asset exchange (DAX) in accordance with local regulations.
In a press release, the financial regulator expressed concerns about Bybit’s non-compliance with Malaysian laws, emphasizing the importance of protecting investors. Operating a DAX without being approved as a Recognized Market Operator (RMO) under Malaysia’s Capital Markets and Services Act 2007 is considered illegal, according to the SC. The breach is seen as a serious issue that could pose risks to the public.
As a result, Malaysian authorities have instructed Bybit to shut down its website and mobile applications by December 25. The regulator has also demanded the cessation of any promotional activities targeting Malaysian investors and the immediate closure of the platform’s Telegram support group for users in the region.
Bybit and Ben Zhou were added to the SC’s Investor Alert List in July 2021, three years prior to the recent directive. This list serves as a warning to Malaysian investors about unregistered entities and individuals they should avoid, including other platforms like Bitget and Atomic Wallet that operate without registration.
The SC has advised investors to only engage with approved RMOs that have undergone rigorous scrutiny to meet legal and operational standards. While cryptocurrencies are legal in Malaysia, they are not considered legal tender, and the SC oversees their regulation by imposing strict compliance requirements on operators. Currently, only six exchanges are licensed to operate within Malaysia.
In response to regulatory compliance efforts, Bybit has blocked login access for Malaysian users since December 24. The exchange has announced plans to re-enter the market once it obtains the necessary licenses. Additionally, Bybit faces regulatory challenges beyond Malaysia, as it recently announced the suspension of withdrawal and custody services for French users starting January 8, 2025, due to increased oversight from French authorities.
Established in 2017, Bybit is a major player in the global cryptocurrency exchange space, managing over $16 billion in assets, according to CoinMarketCap data.
Overall, the regulatory crackdown on Bybit in Malaysia highlights the importance of adhering to local laws and regulations to ensure the protection of investors and the integrity of the cryptocurrency market. Investors are urged to exercise caution and only engage with licensed and compliant exchanges to mitigate risks and safeguard their investments.