Malaysian Regulators Call for a Complete Halt of Binance Services

Malaysia is the latest jurisdiction to impose a ban on the crypto trading platform by calling for Binance to block access to its platform for Malaysian investors.

Securities Commission Cracks Down on Binance

The Malaysian regulator announced on July 30 that enforcement action was taken against Binance Holdings Limited and three other Binance entities. 

The Securities Commission (SC) of Malaysia has commanded the following: 

Disable the Binance website (www.binance.com) and mobile applications in Malaysia within 14 business days from 26 July 2021;

immediately cease all media and marketing activities; and

immediately restrict Malaysian investors from accessing Binance’s Telegram group.

The enforcement came about a year after a public reprimand on Binance was announced in the regulator’s Investor’s Alert List issued in July, 2020. Citing section 7 and section 34(1) of the Capital Markets and Services Act 2007, Digital Asset Exchange (DAX) operators must be registered as Recognized Market Operators (RMO) and allowed to operate by the SC. 

The enforcement notice went one step further by advising investors to stop dealing and investing with unregistered exchanges. Investors were also advised to withdraw all their investments immediately. 

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Impact on Malaysian Investors

The enforcement notice caught many Malaysian investors by surprise. The timeline given to Binance to disable its website and its mobile application in Malaysia is a mere 14 business days. 

 Because of the Malaysian regulatory framework, cryptocurrencies are categorized and described as digital assets. The country currently has 4 registered institutions: Digital Asset Exchanges (DAX): Luno Malaysia, Sinegy Technologies, MX Global, and Tokenize Technology.

Luno Malaysia, the current market leader in Malaysia, only supports five cryptocurrencies: Bitcoin, Ethereum, XRP, Bitcoin Cash, and Litecoin. Litecoin was the latest addition to its list of digital assets where users can invest. 

Other digital assets are not listed by any of the licensed DAXs in Malaysia. Therefore, the only way investors can participate in other digital assets is through other platforms not registered in Malaysia. 

The announcement by SC has received a lot of engagement on Twitter. The regulator, through its official Twitter account, announced the enforcement actions. 

Some requested a reasonable notice period to comply as 14 business days is insufficient, while others asked Binance to commence engagement with the regulators to ensure compliance. 

Malaysians are finding cryptocurrency appealing as an alternative form of investment. Aaron Tang, the Country Manager for Luno Malaysia, in an interview with The Edge Markets in June 2021, revealed that the exchange receives thousands of customers signing up daily. 

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Regulation is the Way Forward   

Regulators are mainly concerned about two issues when it comes to capital and financial markets. Protection to the average investor and maintaining the integrity of the market. 

The crypto industry has grown at breakneck speed. Many investors caught up in the hype may disregard precautionary measures. 

On the other hand, unlicensed entities may disseminate false information or engage in dubious activities that are illegal or risky. These are the concerns that the regulators must immediately address. 

However, the crypto economy is fast becoming a source of income to some people. Content creators can create and market their work on NFT platforms as a source of income. Investors can lock their digital assets through various DeFi protocols for rewards. 

Many Malaysians were adversely affected during the pandemic, and the multiple products and services offered by Binance are viable alternatives. 

Binance has on numerous occasions acknowledged that compliance is the way forward. The best solution is to engage with the Malaysian regulators and resolve the regulator’s concerns. 

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Finding a Middle Path 

The parties can agree to a set of interim measures. Binance can implement steps to stop the onboarding of new Malaysian-based customers to its platform. It can also cease the offering of products and services to its Malaysian customers. 

This solution will not affect those that have already entered into products or services offered by Binance before the enforcement notice. Demanding winding down all commitments within 14 working days would likely result in financial losses.

Source : bsc.news