LABUAN CRYPTOCURRENCY EXCHANGE LICENSE

Cryptocurrency market is the most emerging market since its first existence in 2009 and is the way forward for many businesses. Labuan enables you to deal with international markets with 100% control without the intervention of a local Malaysian whilst enjoying the 3% corporate tax. Labuan, a“midshore” jurisdiction, allows one to deal with the Malaysian market however is subjected to the local corporate tax rate!

Labuan Financial Services Authority has stepped up efforts to regulate trading and exchanges, hence the Cryptocurrency Exchange is licensed and made legit with adequate KYC compliance and AMLA regulations for on-boarding clients to build sustainable businesses.

Labuan, being the substance-enabling jurisdiction at an affordable cost, allows the exchange to easily demonstrate operations substance in the jurisdiction where the cryptocurrency business is domiciled. A low-operational cost and fully compliant jurisdiction is a highly sought after jurisdiction by most cryptoprenuers! It is permitted for a Labuan Cryptocurrency Exchange applicant to apply for an ICO license at the same. For more information, please refer to Labuan ICO License

3 Exchange Models of Your Choice:


  • Fiat Currency to Cryptocurrency
  • Cryptocurrency to Fiat Currency
  • Cryptocurrency to Cryptocurrency
Features of Crypto Exchange

KEY ADVANTAGES OF A LABUAN CRYPTOCURRENCY EXCHANGE LICENSE


  • 100% foreign ownership, Malaysian local partner not required
  • 3% corporate TAX on trading profit
  • NO Withholding Tax on Interest, Management Fee, Royalty Fee and Technical Fee
  • NO FOREIGN EXCHANGE CONTROLS
  • NO Stamp Duty and GST
  • NO Import Duty / Sales / Service Tax
  • NO Capital Gain Tax and Inheritance Tax
  • Ability to access to more than 70 Malaysia Tax Treaty partners
  • 50% tax abatement for expatriate professionals/managers’ employment
  • 100% tax exemption on director’s fees for foreign directors
  • NO tax on dividends to shareholders
  • 2-year multiple entry working visa (renewable) to stay in Malaysia - Optional

Eligible Applicants include:


  1. All applicants must show at least three (3) years of good track record and relevant experience in the cryptocurrency exchange business
  2. Applicants will be required to register a Labuan entity in order to operate the Labuan licensed cryptocurrency exchange company with a paid-up capital of MYR 500,000

Qualifying Eligibility for A Labuan Cryptocurrency Exchange License


  1. Individual or institution with cryptocurrency exchange expertise with a good track record and sufficient years of experience in the industry
  2. Regulated cryptocurrency exchange or provider of such services from other jurisdictions with approval from home authority with the letter of consent
  3. Any licensed institutions including approved cryptocurrency exchange under the Financial Services Act 2013 with approval from the Central Bank of Malaysia

Regulatory and Operational Requirements for A Labuan Cryptocurrency Exchange License


  1. Minimum paid up capital of MYR 500,000 (or equivalent) unimpaired by losses with a certificate of evidence from the banks within Malaysia and Labuan
  2. Must maintain an operational office in Labuan and all transactions must be done to, through and from Labuan
  3. Transact in foreign currencies of your choice, including Malaysian Ringgit (MYR)
  4. Transaction with Malaysian residents is permissible, including authorised dealers approved by the Malaysian Exchange Control
  5. Where technology client interface is deployed, any intrusions or malfunctions of the systems including adverse incidents discovered must be reported to Labuan FSA on the root cause and an impact analysis report is to be submitted within 14 days
  6. The company must appoint an approved external auditor to carry out an audit of business operations annually
  7. Maintain a separate account for clients’ monies and each transaction is to be marked clearly. All withdrawals are to be reported within 3 working days
  8. All written agreements and contracts with clients and any party are required to be documented
  9. Mandatory to observe and comply with the AML/CFT Act and Guidelines issued by Central Bank of Malaysia and Labuan Authority via the provision of a compliance officer
  10. Changes on shareholders, directors, office location, additional office outside Labuan and outsourcing arrangements require prior approval from Labuan FSA
  11. Yearly license fee payable to Labuan FSA is MYR 5,000 (approx. USD 1,250 or equivalent)

Important Documents Required for A Labuan Cryptocurrency Exchange License Application


  1. A three (3) years Business Plan with its financial forecast and marketing strategies
  2. Profile of all Directors and Shareholders, including their qualifications
  3. Latest two (2) years Audited Accounts for current corporate company (if applicable)
  4. KYC, AMLA and Operations Manual / Procedures

Application Timeframe


  1. Approximately 30 to 60 days, subject to further information and supporting documents required by Labuan FSA during the approval process
  2. Interviews / Meetings with the key personnel may be requested by the Labuan FSA to understand or clarify certain processes

Annual Fees


Annual License Fee MYR 5,000
Marketing Office Fee
(optional)
MYR 7,500
Co-Located Office Fee
(optional)
MYR 10,000

The Annual License, Marketing Office, Co-Located Office fees are payable upon approval and valid up to 31st December. For subsequent years, fees are to be paid on or before 15th January of each calendar year.

QX TRUST, your one-stop Trust Company in Labuan!


QX TRUST license application service level for Labuan Cryptocurrency Exchange license include:
  • Consultation on client's eligibility and application procedures
  • Feasibility study write-up based on client's profile
  • Due Diligence, Profiling and Guidance on documents preparation
  • Construct exclusive Business Plan to meet client's business objectives
  • Preparation of Financial Forecast, KYC, Operation and AML/CFT Manuals, Client Agreements etc
  • Submission and supervision of application process until approval
  • Act as liaison and key contact person for both client and Labuan FSA on all correspondences, meetings and /or interviews (if any)