Labuan, strategically located in Asia, is the ideal hub for establishing a compliant Cryptocurrency Exchange in an offshore environment. Positioned as a midshore jurisdiction, Labuan offers a unique blend of offshore benefits while catering to both local and international markets. Recognised on the OECD white list, Labuan’s cryptocurrency exchange license stands as a legitimate gateway for seamless global business operations.
Under the regulatory oversight of Labuan Financial Services Authority (Labuan FSA), cryptocurrency exchange businesses gain legal standing and cost efficiency with the assurance of secure bank account openings in this fully-compliant and white-listed jurisdiction. Labuan encourages companies to maintain up-to-date and robust Know-Your-Client (KYC) compliance systems for onboarding and client management.
Typically, a cryptocurrency exchange platform is integrated with a digital wallet / e-wallet, also known as a payment system. It is plugged in to facilitate secure fund storage, make cryptocurrency transactions (such as Bitcoin, Ethereum, and Ripple), and transparent tracking of transaction histories. Noteworthy platforms like Coinbase allow users to withdraw cash to PayPal accounts or sell cryptocurrency within their PayPal accounts.
Common cryptocurrency wallets fall under the category of hot wallets, connected to the internet via smartphones, laptops or tablets. While providing accessibility for basic transactions, hot wallets also expose users to cybersecurity risks. Therefore, the Labuan jurisdiction has addressed this concern by mandating Labuan Cryptocurrency Brokers to set up a secure system and client interface to ensure the safety of digital assets.
Cryptocurrency to Cryptocurrency
Fiat to Cryptocurrency
Cryptocurrency to Fiat
Fiat to Fiat
Why Choose Labuan
Can conduct Innovative Digital Business with the plugin of e-wallet or digital wallet tools
Can design and trade all of the following in one platform
- fiat to fiat
- fiat to crypto
- crypto to fiat
- crypto to crypto
Low licensing and operating maintenance fee
Short application timeframe
Signed MOU with China Banking and Insurance Regulatory Commission (CBIRC) for greater collaboration
Strategic location to tap into the Asia Pacific market
Shared time zone with major Asian cities for seamless interaction
Excellent infrastructure and regulations within the Labuan IBFC
OECD whitelist jurisdiction status
Recognised by prominent exchanges for entity listing (such as Hong Kong, Singapore, Malaysia, Australia, and Dubai Exchanges)
100% foreign ownership with a minimum requirement of 1 shareholder and 2 directors
Low corporate tax rate of 3%
Absence of withholding tax, stamp duty, GST, import duty, sales or service tax, capital gains tax, inheritance tax
Void of tax on dividends to shareholders
Void of tax on director fees for foreign directors
Eligibility Criteria for Labuan Cryptocurrency Exchange License
1
New Cryptopreneurs with minimum 2 years of experience with a solid business model.
2
Licensed cryptocurrency exchange holders from other jurisdiction's authorities, who can provide similar services.
Application Process of a Labuan Cryptocurrency Exchange License
Licensing & Operational Requirements of a Labuan Cryptocurrency Exchange License
- Maintain a minimum paid-up capital of MYR 500,000 or its equivalent in any foreign currency, unimpaired by losses with a certificate of evidence from the banks in Labuan.
- Impose a maximum leverage limit of 100:1 on clients' trading transactions (i.e. a minimum of 1% margin deposit to enable the opening of trade positions).
- Transact exchanges in any foreign currency except the Ringgit currency.
- No transactions are allowed to be done with Malaysian residents, other than authorised dealers approved by the Malaysian Exchange Control.
- Appoint a principal broker, liquidity provider, and trading platform provider. Copies of agreements are required and they must be regulated by a recognized supervisory or authority.
- Appoint an approved auditor in Labuan to carry out an annual audit which must be submitted within 6 months after the closure of each financial year.
- Maintain a separate account for each client’s monies and client's withdrawal has to be completed within 3 working days.
- Impose a maximum leverage limit of 100:1 on clients' trading transactions (i.e. a minimum of 1% margin deposit for initiating trade positions).
- Where technology client interface is deployed, any intrusions or malfunctions of the systems incidents discovered must be reported to Labuan FSA with the root cause and impact analysis report submitted within 14 days.
- Establish an operational office in Labuan where all transactions must be done in, through and from Labuan. Expand your reach by applying for a marketing office anywhere in Malaysia.
- Where technology client interface is deployed, any intrusions or malfunctions of the systems incidents discovered with the root cause and impact analysis report must be submitted to Labuan FSA within 14 days.
- Ensure compliance with the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 and the Guidelines on Anti-Money Laundering and Counter Financing of Terrorism through the appointment of a compliance officer.
- Consultation on eligibility and procedural guidance tailored to your profile.
- Profiling, due diligence and guidance on documentation preparation.
- Preparation of Business Plan, Financial Forecast and Operation Manuals.
- Submission and supervision of the application process until approval.
- Acting as your liaison and contact point with LFSA, arranging for interviews (if any).
- Tracking the license approval and handling all queries from LFSA.
- Advisory services on the appropriate company structure post-approval.
- Assistance in setting up onshore and offshore bank accounts.
- Assistance in establishing operational and marketing or co-located offices.
- Staff provision and office space rental.
- Internal audit and compliance advisory.
About FAA Advisory Limited
Comprising a team of seasoned professionals well-versed in Labuan's business landscape, FAA Advisory Limited extends a comprehensive suite of services covering corporate services, private wealth management, and licensing compliance administration, all tailored to meet the unique needs of our clients.
At FAA Advisory Limited, our expertise lies in delivering Labuan insights that facilitate business expansion, simplifying intricate processes, and offering valuable information to guide you through various facets of your journey.
Choose FAA Advisory as your trusted partner in navigating the dynamic business landscape of Asia. With our commitment, we are your gateway to success in Labuan and beyond.
Email: advisory@finarkasia.com | Phone number: +6010-931 6678