In a decisive move that highlights the increasing scrutiny of cryptocurrency exchanges, Malaysia’s Securities Commission (SC) has mandated Bybit, a prominent digital asset exchange, to halt its operations within the country. Citing Bybit’s lack of authorization to function as a digital asset exchange (DAX) under the local legislative framework, the SC has acted firmly. This directive originates from the necessity for all exchanges to adhere to the regulations stipulated in the Capital Markets and Services Act 2007, which requires operators to secure recognition as market operators. The SC’s intervention underscores its commitment to investor protection and the enforcement of compliance among financial entities.
The actions taken against Bybit are rooted in serious regulatory breaches that pose inherent risks to the investing public. The SC articulated concerns about Bybit’s failure to meet regulatory obligations, which not only jeopardizes investor safety but also undermines the integrity of the financial ecosystem in Malaysia. Bybit’s immediate compliance failures put it alongside other entities listed on the SC’s Investor Alert List, such as Bitget and Atomic Wallet, which similarly operate without proper authorization. Such inclusions serve as a warning to potential investors to remain cautious and informed.
In practical terms, the SC has given Bybit until December 25 to deactivate its website and mobile applications. This timeline reflects the regulator’s urgency in addressing the situation. Furthermore, the directive prohibits any promotional activities directed towards Malaysian users and mandates the closure of sales channels, including online support groups. Such actions are indicative of the SC’s stringent stance on ensuring compliance and rectifying the operational landscape for cryptocurrency trading in Malaysia.
Despite this setback, Bybit has expressed aspirations to return to the Malaysian market once it secures the necessary regulatory approvals. The situation serves as a stark reminder of the volatility and uncertainty that cryptocurrency exchanges face in various jurisdictions. Malaysian authorities have advised that only exchanges registered as Recognized Market Operators (RMOs) are permitted to operate, a criterion that Bybit, along with several others, has failed to meet. While Bybit has temporarily restricted access to its services for Malaysian users, this is part of a broader strategy to align with regulatory compliance and enhance its standing in the region.
The challenges faced by Bybit are not confined to Malaysia alone; the exchange is experiencing regulatory pressures in other countries as well. For instance, there are plans to suspend withdrawal and custody services for users in France due to heightened scrutiny from local regulators starting January 8, 2025. Such measures reflect a broader global trend where regulatory bodies are becoming increasingly vigilant regarding cryptocurrency trading practices and compliance operations.
The recent directive from Malaysia’s Securities Commission provides critical insights into the relationship between regulatory frameworks and cryptocurrency operations. Bybit’s current challenges underscore the importance of compliance in maintaining market access and protecting investor interests, as well as the complexities of navigating the evolving landscape of global cryptocurrency regulations.