Malaysia’s crypto regulator has raised questions about Bybit’s regulatory compliance and asked the platform to stop operating in Malaysia.

According to the official announcement, published on 27th December, Bybit and its CEO, Ben Zhou, have been censured by the Securities Commission of Malaysia for running an unregistered digital asset exchange in the country.

The Securities Commission has also mandated that Bybit be prohibited in Malaysia and cease immediately promoting Telegram support groups and advertisements to Malaysian investors.

Malaysia’s SC Accuses Bybit of Lack of Regulatory Compliance

Malaysia’s SC has accused Bybit and its CEO of a lack of regulatory compliance. According to the official announcement, the SC has had Bybit and Ben Zhou on its Investor Alert List since July 2021.

The Securities Commission of Malaysia imposed a censure on Bybit and its CEO, Ben Zhou, for operating an unlicensed digital trading platform. The primary concerns of the regulator were the platform’s compliance with local laws and protection of investors’ rights.

Since operating a DAX without first acquiring the SC’s registration as a Recognised Market Operator (RMO) is illegal under Section 7(1) of the Capital Markets and Services Act of 2007, the SC takes this violation seriously.

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Bybit To Face A Ban on Malaysia Operations

Due to the lack of regulatory compliance, Bybit has been instructed by the SC to disable Bybit’s mobile applications, website, and any other digital application platform in Malaysia 14 business days after December 11, 2024.

The regulator has also asked the platform to promptly stop sending, publishing, or disseminating any ads to Malaysian investors, whether through social media posts or other channels.

Additionally, Bybit will have to immediately close the Malaysian Telegram support group as per the regulator. In the same tone, Ben Zhou has also been expressly instructed to make sure that the aforementioned instructions be followed in his capacity as CEO of Bybit.

SC’s Step To Ban Bybit Comes As Malaysia Sees Rise in Crypto Adoption

Malaysia at present is trying to keep a watch on its crypto sector given a slight rise in illegal activities in the sector, However, this rise comes with the backdrop of Malaysia seeing a rise in crypto adoption, which is expected to grow even further in 2025.

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Increased government support and an increase in local blockchain businesses are driving the cryptocurrency adoption boom in Malaysia.

Although Bitcoin and other cryptocurrencies are not regarded as legal cash in the nation, the Malaysian government does allow their trading and possession.

Keeping this growth in mind, researches highlight that by 2025, there will likely be 4.65 million users in Malaysia’s cryptocurrency sector. According to projections, the user penetration rate—a measure of the proportion of the population that uses the cryptocurrency market—will be 13.3% in 2024 and is anticipated to rise to 13.7% by 2025.