Crypto License in Labuan
Last Update: 18.03.2026
Labuan is one of the most favorable jurisdictions in the world for doing business from a taxation perspective, including for cryptocurrency companies. The team of experts at Gofaizen & Sherle is ready to help you register a cryptocurrency company and obtain a license for cryptocurrency operations in Labuan.
Labuan is a federal territory of Malaysia that has become a popular destination for cryptocurrency companies. Thanks to low taxation and a favorable regulatory environment for business, Labuan enables cryptocurrency companies to provide their services in their jurisdiction of incorporation. One of the key advantages for many entrepreneurs in the digital asset space is low operating costs and full compliance with legislation.
In 2018, the Labuan Financial Services Authority (LFSA) included exchanges in its jurisdiction, granting them a license to operate and list offerings. An exchange is a trading platform that allows digital asset owners to list offerings for investors and execute trades, including crypto-to-crypto and fiat-to-crypto (and vice versa) transactions.
In April 2019, Fusang Exchange, Asia’s first fully licensed securities exchange specializing in digital assets, received LFSA approval.
Over the past few years, the Labuan authorities have stepped up their efforts to regulate cryptocurrency trading and exchange, resulting in the cryptocurrency exchange receiving a license and official recognition to attract customers and ensure sustainable business. Labuan thus provides an opportunity to enter international markets with a corporate tax rate of 3%, while the standard corporate tax rate in Malaysia is 24%.
The International Business and Financial Centre (IBFC) provides business structures for digital financial services (DFS) in Labuan. These include digital banking, business insurance, and digital intermediaries such as robo-advisors, digital asset exchanges, cryptocurrency trading platforms, blockchain tokens, and electronic payment systems.
Advantages of obtaining a cryptocurrency license in Labuan
Obtaining a cryptocurrency license in Labuan has many advantages:
Regulation and transparency
The activities of cryptocurrency companies are monitored by the local regulator, which guarantees the legality of operations, compliance with regulatory requirements, and trust from partners and customers.
Tax benefits
Companies are subject to a low income tax rate of 3% and can take advantage of a network of double taxation avoidance agreements with more than 70 countries. There are also no taxes on capital gains, inheritance, imports, or stamp duties.
Fast registration
Company registration takes only a few days, allowing you to quickly enter the market and start operations without lengthy bureaucratic procedures.
Full foreign ownership
Businesses can be 100% owned by foreign investors, with no currency controls. In addition, a long-term work visa is provided for staying in Malaysia.
Access to the Asian market
Labuan is conveniently located in the center of a rapidly developing region, providing access to the markets of Singapore, Hong Kong, Indonesia, and other countries with active crypto economies.
Developed financial infrastructure
The presence of international banks and financial institutions facilitates the use of currencies and payment instruments. The LFSA regulator, operating within Malaysia’s FATF framework, requires strict compliance with AML standards, which increases trust in companies.
International expansion
A license in Labuan allows you to enter global markets, offer services to customers around the world, and expand your customer base.
Modern digital currency exchange capabilities
Companies can use platforms for secure transfers and exchange of digital assets, which simplifies working with cryptocurrencies and electronic money.
Crypto regulation in Labuan
Legal framework for crypto businesses in Labuan
The main laws governing cryptocurrency exchanges are:
- Anti-Money Laundering, Terrorist Financing and Proceeds of Unlawful Activities Act 2001 (Act No. 613);
- Labuan Limited Liability Companies and Limited Partnerships Act 2010 (Act No. 707);
- Labuan Financial Services and Securities Act 2010 (Act No. 704);
- The Labuan Financial Services Authority Act 1996 (Act No. 545);
- The Labuan Trusts Act 1996 (Act No. 554);
- Labuan Companies Act 1990 (Act No. 441);
- Labuan Islamic Financial Services and Securities Act 2010 (Act No. 705);
- Labuan Funds Act 2010 (Act No. 706).
Licensing and registration
A crypto license in Labuan is an official permit from the Labuan Financial Services Authority required to conduct business in the digital asset sector. It confirms the legitimacy of the company’s operations and ensures trust from investors and customers. Before commencing operations, any organization must obtain prior approval from the regulator and comply with stringent requirements in the areas of anti-money laundering, counter-terrorism financing, and operational transparency.
The licensing process in Labuan involves selecting the appropriate category of permits, each of which is designed for a specific type of activity. These include:
- digital asset custodian license;
- token issuer license;
- initial token offering (IEO) operator license;
- cryptocurrency exchange management license.
Each type of license has its own conditions and requirements, ranging from minimum paid-up capital and technical infrastructure to the implementation of asset storage solutions, regular audits, insurance of client funds, and compliance with Islamic finance regulations. Large operators are also required to develop the local blockchain ecosystem and maintain the liquidity of the assets they issue.
Register of crypto companies
All VASPs licensed in Labuan are entered in the official register of the Labuan Financial Services Authority (Labuan FSA). This register is open to the public and regularly updated, making it a reliable source of information for investors, partners, and customers.
The register contains key data on each registered organization:
- company name;
- legal address;
- contact phone number;
- email address;
- name of the responsible representative.
The registry helps clients choose verified partners and helps companies confirm their reputation and reliability. For government agencies and international organizations, the availability of an up-to-date database also simplifies control and coordination in the field of crypto activity regulation.
Requirements for obtaining a cryptocurrency license in Labuan
Obtaining a VASP license in Labuan is subject to strict rules and selection criteria, which guarantee transparency, reliability, and compliance with international standards.
- Business reputation and experience
Applicants may be individuals or organizations with a proven business reputation and at least two years of experience in the cryptocurrency industry. Already licensed companies from other jurisdictions are allowed to participate with the consent of the regulator.
- Minimum authorized capital
The amount of capital depends on the type of license. For example:
- digital asset storage — from US$110,000;
- virtual currency exchange — from US$130,000;
- brokerage and derivatives trading — from US$360,000.
The funds must be verified and transferred to a corporate account.
- Office in Labuan
The company must have a registered office in Labuan. All key transactions and part of the expenses must go through this office, which ensures the local presence of the business.
- Company structure
The company must have at least two directors (natural persons), one shareholder (who may be a natural or legal person), and a Labuan resident secretary. Additionally, local employees must be hired to comply with employment regulations.
- Company name
The name must be in Latin characters and include a legal suffix (Limited, Corporation, Incorporated, etc.). The use of words associated with banking or government activities is restricted, and if a foreign language is used, a translation is required.
- Financial transparency and reporting
The company is required to appoint an external auditor for an annual audit. All transactions must be recorded and, if necessary, submitted to the regulator within three business days.
- Compliance with AML/KYC standards
Procedures for combating money laundering and terrorist financing must be developed and implemented. A responsible employee is appointed to monitor compliance with these requirements.
- IT system security
The company’s infrastructure must include secure systems for working with clients. Any failures or incidents must be reported to the regulator within 14 days, along with an analysis of the consequences.
- Prior approval of changes
Any changes in the composition of shareholders, directors, offices, or the outsourcing of functions require prior LFSA approval.
Process and timing for obtaining a crypto license in Labuan
The process of obtaining a cryptocurrency license in Labuan is well-structured and regulated by the local authority, the Labuan Financial Services Authority (LFSA). On average, it takes 4 to 6 months and involves several key steps.
Step 1: Company registration.
The first step is to establish a legal entity in Labuan. Registration is quick, provided that all necessary documents are prepared, including statutory papers and information about the owners.
Step 2: Preparation of documentation.
Documents required to apply for a cryptocurrency license in Labuan:
- business plan;
- AML/KYC procedures and internal controls;
- information about managers and shareholders (passport details, place of residence, confirmation of at least 2 years of work experience);
- company documents (certificates, articles of association, contracts, minutes);
- documents confirming that the company has a local office (lease or purchase agreement).
If necessary, the LFSA may request additional documents.
Step 3: Submission of an application to the LFSA.
After the documents are prepared, an application is formed and submitted to the Financial Services Authority. At this stage, the correctness of the documentation and the completeness of the package of documents are checked.
The government application fee for a cryptocurrency license in Labuan is US$1,500.
Step 4: Preliminary check and interview.
The regulator analyzes the application and, if necessary, schedules interviews with directors and controlling persons. After verification, the company receives preliminary approval and a list of conditions that must be met.
Step 5: Compliance with regulatory requirements.
The company fulfills the conditions prescribed by the LFSA — for example, posting disclaimers on the website, confirming the transfer of paid-up capital to the corporate account, providing additional KYC documents.
Step 6: Obtaining a license.
After fulfilling all requirements, the company receives a cryptocurrency license. The document may include additional conditions that must be complied with on an ongoing basis.
It is important to note that the licensing procedure may vary depending on the specific requirements and policies of the regulatory authority. For detailed information on the procedure and requirements, it is recommended to consult with Gofaizen & Sherle legal advisors specializing in cryptocurrency licenses.
Request more information about the Labuan Crypto License
Types of cryptocurrency licenses in Labuan
In this jurisdiction, cryptocurrency activities are regulated by the Digital Financial Services License (DFSL), which covers various areas of work with digital assets. Companies can choose one or more license categories depending on their business model:
- Digital asset custodian license.
Intended for companies that provide custodial storage of cryptocurrencies and tokens. Requires a minimum capital of approximately US$110,000, implementation of cold storage solutions, two-factor authentication, and regular audits.
- Initial Exchange Offering (IEO) operator license.
Required for platforms that organize the placement and sale of tokens. Requires significant capital (approximately US$1.2 million), mandatory insurance of user assets, and the creation of a reserve fund. Companies are also required to invest part of their expenses in the development of the local blockchain ecosystem.
- Digital asset issuer license.
Suitable for projects issuing tokens, NFTs, or tokenized shares. Minimum capital is approximately US$120,000. Particular attention is paid to transparency, ESG standards, and a mandatory mechanism for repurchasing a portion of tokens to maintain liquidity.
- Cryptocurrency exchange license.
Gives the right to organize trading in cryptocurrencies and fiat currencies, list digital assets, and provide settlements between participants. Exchanges may additionally provide customer asset storage services and charge transaction fees. Minimum capital — from US$360,000
Company registration in Labuan
The process of registering a company in this jurisdiction is supervised by the Labuan Financial Services Authority (LFSA) and includes several stages:
Step 1: Reserving a company name.
The company must choose a unique name and submit it for registration with the relevant authorities. The name must not contain the words “bank,” “fund,” “municipality,” or “royal family.” The name must be in Latin characters or translated.
Step 2: Preparation of documents and legal formalities.
At this stage, a package of documents is formed.
List of documents for individuals (directors and shareholders):
- notarized copy of passport;
- notarized confirmation of residential address (utility bill or similar document, no older than 3 months, in English or with translation);
- questionnaire and declarations provided by the trust company;
- resume (CV), if necessary — education documents;
- individual registration forms for each director;
- consent to perform the duties of a director.
Company documents:
- memorandum of association and articles of association;
- declaration of compliance with the requirements of the trust company;
- application for reservation of the company name;
- first decision of the board of directors on the appointment of directors, secretary, and legal address;
- share certificates, shareholder applications (for joint-stock companies);
- application for allocation of authorized capital.
For a branch of a foreign company, the following will be required:
- power of attorney;
- constitutive documents of the parent company;
- decision to open a branch.
At this stage, it is also necessary to rent an office in Labuan and appoint a local secretary.
Step 3: Implementation of AML/KYC procedures.
For licensed activities, the regulator requires internal rules on anti-money laundering and counter-terrorist financing to be drawn up, as well as a description of compliance control mechanisms. This condition is mandatory for licensing.
Step 4: Payment of the minimum paid-up capital.
The minimum paid-up capital for crypto companies in Labuan is from US$110,000 (depending on the licensed activity). The funds must be credited to a corporate account and confirmed by documentary evidence.
Step 5: Opening a corporate bank account.
The final step is to open an account with one of the Malaysian or international banks operating in Labuan, such as RHB, Maybank, or CIMB Group. The account is used to deposit the authorized capital and make further payments.
After registering the company, you can apply for a VASP license.
Overview of cryptocurrency regulation in Labuan
Key financial and administrative requirements for regulating cryptocurrency activities in Labuan:
| Project time frames | Approximately 6 months |
| Government application fee | US$1,500 |
| Minimum paid-up capital | From US$110,000 |
| Corporate income tax | 3% |
| Annual supervision fee | US$1,500 |
| Local employee | Secretary, employee, and anti-money laundering officer |
| Physical office | Required |
| Accounting audit | Required |
| Business continuity | Stable |
| Bank account options | Some European EMIs, midshore EMIs |
Digital asset regulation in Labuan
In Labuan, cryptocurrencies account for 21% of assets, ranking third in importance in Malaysian society after real estate (44%) and gold (33%). The existing cryptocurrency exchange has a license and legal status. The Labuan Financial Services Authority (LFSA) is responsible for regulating the financial industry and supervising cryptocurrency companies in Labuan. Thus, cryptocurrency companies in Labuan are subject to the same laws and regulations as other financial institutions in the region.
Taxation of cryptocurrency companies in Labuan
The taxation of cryptocurrency companies in Labuan is subject to the current tax laws and regulations in Malaysia. Labuan, as a jurisdiction, offers certain tax advantages to attract international business entities, including cryptocurrency companies.
Labuan’s tax laws include:
- Labuan Business Tax Regulations (Labuan Business Tax) 2021;
- Business Tax (LITC Substance) Regulations 2021;
- Labuan Business Tax Act of 1990 with the most recent amendment of 2021 (LBATA).
A few key points regarding the taxation of cryptocurrency companies in Labuan:
- Labuan Business Activity Tax. Under LBATA, Labuan companies engaged in qualifying activities, including cryptocurrency transactions, can elect to be taxed at a flat rate equal to 3% of audited net income or a fixed amount of 20,000 Malaysian ringgit (about $4,000), whichever is greater. This tax regime applies to Labuan companies that meet certain requirements, such as carrying out core activities exclusively with non-residents and not participating in the Malaysian domestic market.
- There is no tax on interest, management fees, royalty fees, or technical support fees in Labuan. In addition, there is no stamp duty, goods and services tax, import duty/sales/services tax, capital gains tax, and inheritance tax. Additionally, there is a 50% tax credit for hiring foreign professionals/managers, a 100% tax exemption on director’s compensation for foreign directors, and no dividend tax for shareholders.
- Bilateral double taxation treaties. Malaysia has an extensive network of bilateral double-taxation treaties with many countries. These agreements aim to eliminate double taxation and provide tax benefits for Labuan companies engaged in international business activities, including cryptocurrency transactions. Cryptocurrency companies in Labuan can receive reduced or exempt taxes on certain transactions with countries that have Bilateral Agreements with Malaysia.
It is important to note that tax regulations and policies can change over time, and cryptocurrency companies in Labuan need to stay up-to-date on the latest tax laws and consult with tax professionals.
Obligations for conducting crypto business in Labuan
Companies that have obtained a license to provide services with virtual assets (VASP) in Labuan are required to comply with strict financial, auditing, and regulatory requirements.
Accounting obligations
When conducting accounting and auditing for cryptocurrency companies in Labuan, several key points and requirements must be taken into account:
- Financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) or other generally accepted accounting principles approved by the Labuan FSA.
- Companies are required to correctly classify crypto assets, separating investment portfolios from operating assets.
- Full accounting of transactions with digital assets is maintained.
A mandatory requirement is the implementation of internal control mechanisms to protect assets and prevent errors and fraud.
Audit requirements
Cryptocurrency companies must have their financial statements audited annually by an independent auditor. The auditor must be approved by the LFSA and have the necessary qualifications and experience.
The reports include key documents:
- balance sheet;
- income statement;
- cash flow statement;
- notes to the financial statements.
The audit confirms the accuracy of crypto asset accounting and the company’s compliance with regulatory requirements.
In addition, companies are required to strictly comply with anti-money laundering and counter-terrorist financing rules, conduct customer due diligence, monitor suspicious transactions, and appoint a compliance officer. It is also important to maintain robust cybersecurity systems and regularly update internal procedures.
Given the complexity of accounting and auditing for cryptocurrency companies, it is recommended to engage professional accountants and auditors who are familiar with Labuan’s regulatory requirements and have experience in the crypto industry.
Liability for non-compliance
The Financial Services Act 2013 clearly regulates the consequences of violations and provides for strict measures against financial crimes. Any activity with digital assets without the appropriate license is strictly prohibited. Violation of these rules may result in the immediate termination of the company’s activities and the application of serious measures in accordance with the law.
Beneficiaries and company owners are personally liable. They face up to 10 years in prison and fines of up to 5,000,000 Malaysian ringgit (approximately US$1.2 million) for illegal activities. If a company does not comply with the minimum paid-up capital requirements, the fine can be up to 25,000,000 ringgit (approximately US$6 million), and the owners face up to 8 years in prison.
Conclusion
Labuan is one of the most attractive jurisdictions for crypto businesses due to its low taxation, transparent LFSA regulation, and the possibility of full foreign ownership. To obtain a VASP license, companies must comply with requirements for authorized capital, a local office, AML/KYC procedures, and IT security. A crypto license in this jurisdiction ensures the legality of operations and investor confidence.
The lawyers at Gofaizen & Sherle are ready to assist with the process of registering a crypto business in Labuan, including selecting the appropriate license, preparing documents, and interacting with the regulator. The company’s specialists also assist in registering cryptocurrency companies in other jurisdictions, providing comprehensive support at all stages of launching and legally operating a digital business.
FAQ on obtaining a crypto license in Labuan
Is cryptocurrency activity permitted in Labuan?
Yes, trading and transactions with digital assets in Labuan are completely legal, provided that a VASP license is obtained from the Labuan Financial Services Authority (LFSA).
How to obtain a license for a cryptocurrency business in Labuan?
To obtain a license, you must register a company in Labuan, prepare a package of documents, including a business plan, information about directors and shareholders, implement AML/KYC procedures, rent an office, and comply with the requirements of the LFSA regulator. After that, an application is submitted, a check and interview are conducted, and upon fulfillment of all conditions, the company receives an official license.
How long does it take to obtain a cryptocurrency license in Labuan?
The process takes 4-6 months on average.
Can foreign companies obtain a crypto license in Labuan?
Yes, foreign investors can fully own a company in Labuan. To apply, you must meet the LFSA requirements, including experience in the crypto industry, authorized capital, and a local office. Full foreign ownership and no currency controls make Labuan a convenient jurisdiction for international business.
Explore other Crypto Licences
Connect with our experts
Our experts will tell you how to do it as quickly and easily as possible.
By clicking the button, I confirm that I have read the privacy policy and consent to the collection and processing of my personal data in accordance with the GDPR rules.