In a recent move, Malaysia’s prominent securities regulator, the Securities Commission (SC), has directed the Seychelles-based crypto exchange Huobi to cease operations within the nation. The cause behind this decision seems to stem from Huobi’s operation of a digital asset exchange without proper registration. Under the Capital Markets and Services Act 2007, running a crypto exchange without a Recognised Market Operator (RMO) license is considered an offense.
Furthermore, the SC has issued a public reprimand against both the exchange and its founder Leon Li. As the CEO of the company, Li has been instructed to manage the process of winding down local operations, halt communications with Malaysian investors, disable their website, and withdraw the app from app stores. The SC’s announcement highlights that this enforcement action was taken with concerns regarding the platform’s compliance with local regulatory requirements and the protection of investors’ interests.
While Malaysia may not be the first country that springs to mind in the global crypto arms race, recent developments indicate that this might change soon. In September 2021, the Malaysian central bank collaborated with the Bank for International Settlements on a trial, and in January, it revealed its efforts on a proof of concept “to enhance our technical and policy capabilities, should the need to issue [a] CBDC arise in the future.” A Central Bank Digital Currency (CBDC) is essentially a centrally-issued digital asset that derives its value from a nation’s legal tender.
Moreover, in March, Malaysia’s Deputy Minister of Communications and Multimedia, Zahidi Zainul, shared his thoughts on recognizing Bitcoin as legal tender. Zainul encouraged the government to allow for this change, stating, “We hope the government can allow this” in his response to a question posed by the opposition in Parliament.
As Malaysia takes steps towards embracing cryptocurrency, the recent action against Huobi showcases a potential hurdle for unregistered exchanges looking to make their mark in the region. It exemplifies the importance of adhering to local regulations and underscores the need for businesses to prioritize the interests of investors. On the other hand, this move may also present opportunities for exchanges that are willing to comply with the stringent regulations, offering them a chance to enter the market and contribute to the country’s growing crypto ambitions.
Source: Decrypt
