Malaysia’s Securities Commission has taken decisive action against cryptocurrency exchange Bybit for operating without proper registration, signaling a crackdown on unregulated digital platforms in the country. The commission instructed Bybit and its chief officer, Ben Zhou, to cease all operations in Malaysia and halt all advertisements targeting Malaysian audiences.
The Securities Commission’s enforcement proceedings against Bybit were initiated on December 27, citing concerns about the platform’s compliance with regulatory obligations and investor protection. Bybit was ordered to cease all digital platforms operating in Malaysia from December 11 onwards, including its website and mobile applications. Additionally, the company must deactivate its local Telegram support group and cease advertising to Malaysian investors.
The commission highlighted that offering a digital asset exchange without obtaining the SC’s Recognised Market Operator registration is a violation of the Capital Markets and Services Act 2007. Bybit and Zhou had previously been included in the SC’s Investor Alert List for similar regulatory offenses since July 2021.
Bybit has complied with the enforcement directions, but the commission cautioned Malaysian investors about trading with unregistered platforms, as they are not protected under Malaysia’s securities laws and are more vulnerable to financial crimes. Currently, there are only six registered crypto exchanges in Malaysia that can legally operate, including HATA Digital Sdn Bhd, Luno Malaysia Sdn Bhd, and Tokenize Technology Sdn Bhd.
Bybit confirmed the enforcement action on its Malaysian Telegram channel, expressing understanding for any inconvenience caused and expressing hope to reconnect with Malaysian investors in the future once they obtain the necessary licenses. This recent crackdown in Malaysia follows Bybit’s exit from the French market in August due to stricter licensing requirements in preparation for the European Union’s Markets in Crypto-Assets regulations.
The regulatory scrutiny faced by Bybit across multiple jurisdictions underscores the challenges that crypto exchanges are currently navigating. As the industry continues to evolve, compliance with regulatory frameworks will be crucial for ensuring investor protection and maintaining the integrity of the market.