The Securities Commission of Malaysia (SCM) has issued a report demanding Huobi to seize operations after failing to comply with the registration requirements. The regulators observed that the Seychelles-based crypto exchange issued crypto assets without obtaining proper registration.
In their findings, the regulators mentioned that Huobi failed to meet the Recognised Market Operator (RMO) licensing requirements. Under the Capital Markets and Services Act of 2007 all businesses in the region to obtain necessary licenses.
Huobi Contravenes with Malaysian Law
Reportedly failing to meet the RMO provision, the regulators must take potential legal action against the business under question due to non-compliance. According to the SCM report, the regulators have instructed the chief executive of Huobi Leon Li to direct the firm to disable the website, sunset its Malaysian operations and suspend communication between the company and the users.
In addition, the regulators have ordered Li to instruct the Huobi technical team to remove its application from the Apple stores and Google Play. The regulators ordered Huobi to seize promoting its crypto products and services in Malaysia.
In November 2022, Huobi was acquired by the Hong Kong fund management company About Capital Buyout to support the crypto firm in rebranding. After probing Huobi operations in Malaysia, the regulators observed that the crypto exchange failed to comply with the regulatory requirement fully.
Initially, the existing regulation in the region aimed at safeguarding the investor’s interest. A report from Huobi spokesperson revealed Huobi has nothing to do with the current provision since it changed ownership last year. He added that Huobi has always upheld conformity to the law.
Review of Malaysia Law
In August 2022, it was reported that the regulatory watchdog in Malaysia warned the investor against doing business with Huobi. They argued that the crypto exchange operated without conforming to the regulatory requirements.
The regulator’s early warnings forced Huobi to engage with the SCM to support the crypto exchange to meet all the regulatory requirements. Before this, the crypto firm launched Huobi Labuan, which provided users with crypto spots and derivatives trading for nine months.
As of this writing, only four companies are registered with the SCM as crypto exchanges. The SCM website mentioned that Luno Malaysia, MX Global, Tokenize Technology and Sinegy are legally allowed to operate as crypto exchanges in the region.
Previously the Malaysian central bank collaborated with the Bank of International Settlement (BIS) to develop crypto-related technologies. In January, the partners confirmed to be working on developing the proof of concept to strengthen the country’s technical and political stability.
The partners announced plans to launch the central bank digital currency (CBDC) in the long run. Besides the efforts to develop the CBDC, the Deputy Minister of Communication Zahidi Zainul proposed Malaysia adopt Bitcoin as a legal tender. Zainul urged the parliament to accept her proposal to accept Bitcoin payments.