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Malaysia’s securities regulator, the Securities Commission, has ordered cryptocurrency exchange Huobi to cease all operations in the country.
The action came after the regulator raised compliance concerns, stating that it had failed to register its digital asset exchange before commencing operations.
All Activity To Be Stopped
Huobi Global seems to have fallen foul of the country’s securities regulator. The Securities Commission Malaysia issued an official statement on the 22nd of May, stating that Huobi Global had failed to register as a cryptocurrency exchange operator in the country. As a result, the exchange must shutter all operations in the country. Furthermore, the Securities Commission also directed Huobi to disable its mobile application on Google Play Store and Apple Store and disable its website. The exchange is also expected to stop all advertising related to its services and products targeted at Malaysian users via social media and email.
According to the regulatory authorities in Malaysia, operating a cryptocurrency exchange without a Recognised Market Operator (RMO) license counts as an offense under the country’s Capital Markets and Services Act 2007. The authorities also issued a public reprimand against the exchange and its founder Leon Li. Li is also expected to oversee the process of Huobi winding down its operations in the country.
Compliance Issues
The Securities Commission Malaysia, in its communication, explained that its decision was driven by concerns about Huobi’s compliance with local regulatory requirements. With the exchange failing to get SCM registration, authorities have directed investors to stop all trading activity on the platform, withdraw their funds, and close all accounts.
Huobi Global has been in the sights of Malaysian regulatory authorities since August 2022. At the time, the Securities Commission Malaysia had issued an investor alert sounding out users that the exchange was operating without the requisite permissions.
Huobi Responds
Huobi Global had recently undergone a complete rebranding in 2022 following its acquisition by About Capital Buyout Fund. Following reports of the enforcement action by the Securities Commission Malaysia, a Huobi spokesperson clarified that the current order does not pertain to the Huobi that is operational after the change in ownership.
“In response to recent reports, we would like to clarify that the situation outlined pertains to the previous Huobi entity and former shareholders. This is not associated with the current Huobi platform, which adheres to strict regulatory compliance globally. “
A Difficult Space To Operate In
Following the initial announcement, Huobi had indicated that it was locked in discussions with Malaysian authorities regarding its regional operations. In November 2020, the company launched Huobi Labuan, a brokerage firm that had a temporary window to offer users cryptocurrency spot and derivatives trading. In 2022, Binance finally managed to gain a foothold in the Malaysian crypto space by acquiring a stake in trading platform MX Global.
During its initial foray into the market, Binance had found itself in a similar predicament as Huobi, with authorities ordering the exchange to cease operations in the country. According to the authorities, Binance did not have the necessary regulatory approvals in place to carry out operations. According to the Securities Commission Malaysia website, only four companies are recognized and allowed to operate cryptocurrency exchanges in the country. These are MX Global, Sinegy, Luno Malaysia, and Tokenize Technology. However, this list has not been updated in some time, with its last update coming in August 2022.
A Malaysian CBDC?
In 2021, Malaysia’s Central Bank announced that it was working on a Proof-of-Concept to help enhance its technical and policy capabilities, should it issue a CBDC in the future. It also joined a trial with the Bank for International Settlements. A CBDC, or Central Bank Digital Currency, is a digital asset issued by the central bank and gets its value from a nation’s legal tender. In March, Zahidi Zainul, Deputy Minister of Communications and Multimedia, stated that the country must recognize Bitcoin as a legal tender.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.