Huobi Global Limited, a prominent cryptocurrency exchange, has been ordered to halt operations in Malaysia. The Securities Commission Malaysia (SCM) discovered that the exchange was functioning without proper registration, thereby violating the country’s Capital Markets and Services Act of 2007. In response, the SCM demanded that Huobi disable its website and mobile apps, including those available on the Apple Store and Google Play.
The regulator expressed that it takes these violations seriously, as compliance with local regulations is crucial to ensuring the protection of investors’ interests. SCM’s decision echoes concerns about the platform’s compatibility with regulatory standards. Huobi Global Limited’s CEO Leon Li has been explicitly instructed to ensure the exchange complies with SCM’s directives, including disabling the site and ceasing its advertising activities.
SCM also issued a warning to investors about selecting suitable platforms, urging caution when presented with seemingly “too good to be true” investment returns. The regulator emphasized that investors dealing with unlicensed or unregistered entities are exposed to an increased risk of fraud and may not receive protection under Malaysia’s securities laws.
This crackdown on Huobi Global Limited comes amidst ongoing tensions between cryptocurrency exchanges and regulatory bodies in the United States. Recently, US Securities and Exchange Commission (SEC) Chair Gary Gensler called for exchanges to register, describing them as “rife with conflicts.” This contrasts with the stance taken by San Francisco-based exchange Coinbase, which argues that the SEC has not provided an appropriate pathway for registration. Coinbase was served a Wells notice earlier this year, indicating that the SEC is prepared to recommend formal charges against the company.
Coinbase’s Chief Legal Officer, Paul Grewal, expressed frustration at the SEC’s lack of guidance on how securities laws should apply to their platform and the broader cryptocurrency industry. While the SEC’s stance on exchange registration appears uncompromising, it has seemingly offered limited resources to facilitate compliance efforts.
Cases like Huobi Global Limited in Malaysia and Bittrex in the US demonstrate that as governments and regulators increasingly scrutinize the cryptocurrency sphere, exchanges must adapt to the evolving regulatory landscape. While regulations serve the critical function of safeguarding investors, the process of aligning with these requirements can undoubtedly present challenges for cryptocurrency exchanges. Moving forward, candid dialogue and guidance between exchanges and regulators will be instrumental in cultivating a balanced, secure, and receptive environment for digital assets.