The Securities Commission Malaysia (SC) has accused Huobi, one of the leading cryptocurrency exchanges, of operating without the necessary authorization in the country. The regulatory watchdog has ordered the company to immediately disable its website and mobile application in Malaysia, citing concerns about compliance with local regulatory requirements and the protection of investors’ interests. This article delves into the details of the accusation, the implications for Huobi, and the contrasting regulatory landscape in other parts of Asia.
The SC has alleged that Huobi and its CEO, Leon Li, have been operating a digital asset business illegally in Malaysia. The regulator has specifically ordered the company to cease its domestic operations, including its website and mobile application across platforms like Apple Store and Google Play.
Additionally, Huobi has been directed to refrain from sending any advertisements, be it through email or social media, to Malaysian investors. The SC considers Huobi’s breach a serious offense under Section 7(1) of the Capital Markets and Services Act 2007, as the exchange failed to secure the SC’s registration as a Recognised Market Operator (RMO).
Implications for Huobi
The SC’s order poses significant challenges for Huobi’s operations in Malaysia. With its website and mobile application disabled, the exchange will not be able to provide services to Malaysian investors. Huobi will have to comply with the directive and halt its activities in the country until it resolves the regulatory concerns and obtains the necessary authorization.
Moreover, the company will need to address the issue of investor trust, as customers who have used the exchange’s services are advised to cease trading, withdraw their assets, and close their accounts. Restoring trust and regaining a foothold in the Malaysian market will require Huobi to demonstrate strict compliance with local regulations and establish robust investor protection measures.
While facing regulatory challenges in Malaysia, Huobi has been proactive in expanding its presence in other parts of Asia. Notably, the exchange has applied for a trading license with Hong Kong’s regulatory authorities. This move signifies Huobi’s commitment to operating in a compliant and regulated manner.
Justin Sun, Founder of Tron and a member of Huobi’s Global Advisory Board, emphasized the importance of this step for the exchange. In addition to pursuing a trading license, Huobi is planning to launch Huobi Hong Kong, a new venue in the special administrative region of China. This platform aims to be fully compliant with local regulations and offer a range of trading pairs and services to customers.
Contrasting Regulatory Landscape:
Hong Kong’s regulatory environment stands in stark contrast to the situation in Malaysia. The authorities in Hong Kong have adopted a more favorable stance towards cryptocurrencies, positioning the region as a digital asset hub. This approach has attracted leading exchanges like Huobi and OKX, which have sought regulatory permits in the area.
Furthermore, local cryptocurrency firms and banks have initiated dialogues to facilitate smoother interactions within the industry. Huobi’s efforts to establish a compliant presence in Hong Kong align with the favorable regulatory climate, providing the company with opportunities for expansion and growth in the Asian market.