According to a Senior Account Manager at Stone Bridge Ventures, Nick Rogan, Malaysia has some of the strictest crypto regulations in Asia. While it hasn’t gone so far as to ban it like in China, it’s far from a wild west where crypto scams can run rampant. And all of this traces back to when the government announced that cryptocurrencies would be treated as securities, thus putting them under the regulation of the Securities Commission.
Since then, the regulator has registered a few verified crypto exchanges and ordered the rest to cease operations. And compared to other countries, crypto investors have fewer options about which tokens they can trade through verified exchanges. The only available options are Bitcoin, Ethereum, and XRP on most of these, but this could be because the Securities Commission considers them somewhat stable.
With time, one of the biggest exchanges operating in Malaysia, Huobi, was asked to shut down operations. This includes disabling its mobile applications and the website due to violation of securities laws: selling cryptocurrencies without getting a registration.
Digital Asset Exchanges Face Requirements by SC
As part of the requirement to acquire a registration, digital asset exchanges must prove that their senior management is capable of complying with security measures. This involves taking action to reduce money laundering and terrorism financing risks. And Huobi Global wasn’t the only exchange getting the boot – the Securities Commission shuttered 40 digital asset exchanges in March 2019.
The Securities Commission sent out an order requiring the company to stop publishing, sending, and circulating advertisements among Malaysian investors. According to the Capital Markets and Services Act, it’s illegal to operate a digital asset exchange without getting appropriate registration as a Recognized Market Operator from the Securities Commission.
Malaysia’s main regulatory authority ordered the chief executive officer at Huobi, Leon Li, to ensure that all the exchange’s services are disabled. The SC also issued a notice to Malaysian investors, informing them to stop trading on the platform. Investors were also told to withdraw their funds and disable their accounts.
Huobi Traders Switch Over To New Exchanges
Currently, most investors who used the change have migrated to other platforms for the purpose of crypto trading. But this doesn’t come at a cost: Huobi Global was the country’s third-largest digital asset exchange. During the fourth quarter of 2022, the exchange was bringing in around 20 percent of the country’s total crypto trading revenues.
But how can this impact the future of crypto investment in the country? Although the shutdown of Huobi may have had an effect on the rate of crypto investments this year, it’s not the only reason. Growing inflation rates, unstable market conditions, and various other factors have affected investors’ appetite for risky investments such as cryptocurrency.
Even if Huobi hadn’t faced the regulatory backlash from Malaysia’s Securities Commission, the collapse of various exchanges in the US has had a detrimental effect on the global crypto industry. Nevertheless, Stone Bridge Ventures Nick Rogan still believes that it’s critical for the government to take certain steps and help crypto investors navigate difficult conditions.