Crypto License in Labuan

The following qualified entities may obtain a license for a cryptocurrency exchange in Labuan:

1. Individuals or organizations with a good reputation and sufficient experience in the cryptocurrency exchange industry with long-term experience in the industry.
2. Regulated cryptocurrency exchanges or similar service providers from other jurisdictions that have obtained approval from local authorities in Labuan in the form of a letter of consent.
3. Any licensed institutions, including approved cryptocurrency exchanges under the Financial Services Act 2013, with the approval of the Central Bank of Malaysia.

Regulatory and regulatory requirements to obtain a cryptocurrency license in Labuan include:

1. Minimum paid-up capital of $130,000, which has not been reduced by losses. A certificate from banks in Malaysia and Labuan is required.
2. Local office in Labuan. All transactions must be conducted in, through, and out of the local office to meet minimum expense requirements.
3. Licensees are permitted to conduct transactions in foreign currencies of their choice, including the Malaysian Ringgit (MYR). Transactions with residents of Malaysia are permitted, including authorized dealers approved by the Malaysian Monetary Authority.
4. Secure system and reporting. The company must have a built-in security system that provides an interface for the technology client. Any intrusions or system failures, including adverse incidents, must be reported to the Labuan Financial Services Authority (FSA) with the root cause and an impact analysis report must be submitted within 14 days.
5. Audit and Reporting. The company must appoint an approved external auditor to conduct an annual audit of business transactions. Each transaction must be recorded and all findings reported within 3 business days.
6. AML/CFT Compliance. The licensee must strictly comply with the Anti-Money Laundering and Counter-Terrorist Financing Act and the Guidelines published by the Central Bank of Malaysia and Labuan Authorities. This must be enforced through the appointment of a compliance officer.
7. In case of changes in shareholders, directors, office location, or the establishment of additional offices outside Labuan, as well as in the case of outsourcing, prior approval from the Labuan Financial Services Authority (FSA) is required.

Other regulatory requirements include:

1. Company structure:
   • the company must have at least 1 shareholder, which can be a natural person or a legal entity (nationality or residency of the shareholder is not limited);
   • the company must have at least two directors, who must be natural persons (the nationality or residence of the directors is not limited);
   • the company must appoint a secretary who is a resident of Labuan, whose task is to monitor compliance with the law and the company's obligations;
   • a certain number of local employees are required in the company to have an active presence in Labuan and to comply with local employment requirements.
2. Companies incorporated in Labuan must adhere to the following rules regarding the name:
   • the company name must consist of letters of the Latin alphabet;
   • the company name must end with one of the following suffixes or their abbreviations: Limited, Corporation, Incorporated, Societe Anonyme, Sociedad Anonima;
   • if a company uses the Malaysian word "Berhad", it must be preceded by the letter "L" to indicate the company's registration in Labuan.
3. Restrictions on a company name include:
   • the company name may not contain words or phrases that require approval or license, such as "Bank," "Building Society," "Investment Fund," "University," etc;
   • the company name must not contain direct links to the name of state, national, or local governments;
   • the name must not imply illegal activities or imply royal or state patronage;
   • the registrar has the right to reject any company name which he deems undesirable or contrary to the public interest;
   • the name may not be wholly or substantially similar to an existing company name;
   • if a foreign language is used for the company name, a translation must be provided to the registrar to ensure compliance with the above restrictions.

The procedure for obtaining a license to exchange cryptocurrencies in Labuan includes the following steps:

1. Preparation of documents:
   • a business plan for three years, including projected revenues and expenses;
   • documents confirming the company's experience in exchanging cryptocurrencies and its reputation;
   • financial reports and certificates from banks confirming the opening of a corporate bank account and the availability of the necessary capital;
   • documents confirming the presence of a local operating office in Labuan;
   • information on the company's senior management and shareholders;
   • anti-money laundering policies and procedures.
2. Submission of the application to the Labuan Financial Services Authority.
3. Preliminary verification of the application and documents submitted.
4. Once the Labuan FSA has completed its preliminary review, it may request interviews with the company's directors, chief executive officer, and controllers. Once satisfied, the Labuan FSA issues approval in principle and provides a list of requirements that must be met within a certain time frame. Some of these requirements may include posting disclaimers on websites, transferring paid-up capital to a corporate bank account, or providing additional KYC documents.
5. After completing all the above requirements, Labuan FSA will issue a full license to perform cryptocurrency exchange in Labuan. However, the license may contain specific conditions and requirements that the company must comply with.

Obtaining a license takes approximately 4 to 6 months.

It is important to note that the procedure for obtaining a license may vary depending on the specific requirements and policies of the regulatory agency. It is recommended to contact Gofaizen & Sherle legal advisors who specialize in cryptocurrency licenses for detailed information about the procedure and requirements.