Malaysia Prohibits Bybit from Performing Operations
The Securities Commission of Malaysia (SC) has taken a firm stance against unlicensed cryptocurrency exchanges, ordering Bybit and Huobi to cease all activities in the country by December 25, 2023, and January 8, 2025, respectively. This move comes as part of a broader regulatory crackdown on exchanges operating without licenses in Malaysia.
The regulatory pressure faced by Bybit and Huobi is not limited to Malaysia. In the Philippines, the Securities and Exchange Commission (SEC) issued a formal warning against Bybit, along with other major exchanges such as OKX and Kraken, for operating without the required license. This action highlights the risks posed to local investors due to non-compliance with new crypto laws.
In France, Bybit announced it would cease withdrawal and custody services for French users starting January 8, 2025, while Huobi halted all services from the same date. Both decisions were made in response to increasing regulatory pressure, reflecting the tightening regulatory environment and challenges these exchanges face globally.
Risks of Dealing with Unlicensed Crypto Exchanges
Dealing with unlicensed crypto exchanges like Bybit and Huobi in some jurisdictions carries significant operational and legal risks for users. These risks include legal exposure, investor protection concerns, asset accessibility risks, market integrity and compliance issues, and potential risks of money laundering and fraud.
Exchanges operating without proper authorization risk enforcement actions, shutdowns, or restrictions that can disrupt user access to funds and services. Without regulatory oversight, users may be vulnerable to fraud, lack of transparency, or poor dispute resolution mechanisms. Regulatory crackdowns can lead to forced delistings, freezes, or complicated procedures to recover funds.
Unlicensed exchanges might list low-liquidity or inactive tokens, increasing the risk of poor execution or scams. This prompted platforms like Bybit to delist such pairs for compliance and quality reasons.
Implications for Investors and the Crypto Market
The regulatory scrutiny faced by Bybit and Huobi in multiple countries underscores the growing global emphasis on licensed operation and investor protection in crypto markets. Investors are advised to exercise caution when dealing with unlicensed exchanges and to verify the legitimacy of the platform they are using.
The raids on cryptocurrency traders in Malaysia indicate increased scrutiny of the cryptocurrency market by the authorities. This trend is likely to continue as regulators worldwide strive to protect investors and maintain market integrity.
In conclusion, the actions taken against Bybit and Huobi serve as a reminder of the importance of operating within the confines of the law and regulatory guidelines. Investors are encouraged to only engage with licensed and reputable crypto exchanges to mitigate potential risks and ensure the safety of their investments.
[1] Securities and Exchange Commission (Philippines). (2023). Formal Warning Against Bybit, OKX, and Kraken. Retrieved from https://www.sec.gov.ph/news/press-releases/sec-issues-formal-warning-against-bybit-okx-and-kraken/
[3] Bybit. (2024). Bybit to Cease Withdrawal and Custody Services for French Users. Retrieved from https://www.bybit.com/en-US/news/bybit-to-cease-withdrawal-and-custody-services-for-french-users/
[5] Bybit. (2023). Bybit Delists Certain Pairs for Compliance and Quality Reasons. Retrieved from https://www.bybit.com/en-US/news/bybit-delists-certain-pairs-for-compliance-and-quality-reasons/
In response to the increasing global regulatory crackdown on unlicensed crypto exchanges, investors should exercise caution when dealing with platforms like Bybit and Huobi to protect their investments from potential risks and ensure proper registration in their jurisdictions. This tightening regulatory environment, as evident in Malaysia and the Philippines, highlights the need for exchanges to operate within the boundaries of law and regulatory compliance, as failure to do so can lead to enforcement actions, asset accessibility issues, and challenges for market integrity, including risks of money laundering and fraud. Fintech companies and industry participants need to prioritize compliance to avoid financial penalties and maintain consumer trust.
