The Securities Commission of Malaysia (SC) has directed cryptocurrency exchange Bybit and its business chief, Ben Zhou, to cease all digital operations in the country and stop advertising to Malaysian audiences.
In a media release dated Dec. 27, the SC announced it had initiated enforcement proceedings against Bybit for offering a crypto trading platform without proper registration. The platform was ordered to shut down its operations, including its website, mobile applications, and local Telegram support group, by Dec. 11, with a 14-business-day compliance window.
Regulatory Breach and Investor Protection Concerns
The SC raised concerns over Bybit’s lack of compliance with Malaysia’s regulatory framework, specifically for operating without obtaining Recognised Market Operator registration as mandated under Section 7(1) of the Capital Markets and Services Act 2007. The SC emphasized that such operations are unlawful and have flagged Bybit and Zhou in its Investor Alert List since July 2021 for similar violations.
In its enforcement notice, the SC warned Malaysian investors about the risks associated with unregistered platforms. Transactions conducted on such platforms fall outside the protection of Malaysian securities laws, leaving investors vulnerable to financial crimes.
Currently, only six crypto exchanges are authorized to operate in Malaysia: HATA Digital Sdn Bhd, Luno Malaysia Sdn Bhd, MX Global Sdn Bhd, SINEGY DAX Sdn Bhd, Tokenize Technology Sdn Bhd, and Torum International Sdn Bhd.
Bybit’s Response
Bybit has complied with the enforcement directive and acknowledged the action in its Malaysian Telegram channel. The exchange expressed regret for the inconvenience caused to local users and indicated hope for resuming operations in the future, contingent on obtaining the required licenses.
Global Regulatory Challenges
This marks the second regulatory setback for Bybit in recent months. In August, the exchange exited the French market due to stricter licensing requirements under the European Union’s Markets in Crypto-Assets (MiCA) framework. The incident underscores the growing regulatory pressures on cryptocurrency exchanges globally, as authorities tighten oversight to ensure compliance and investor protection.
Bybit’s situation highlights the delicate balance between the growing adoption of cryptocurrencies and the regulatory hurdles exchanges face in diverse jurisdictions.
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