How to Obtain a Labuan Cryptocurrency Exchange License: A Step-by-Step Guide

• To obtain a Labuan Cryptocurrency Exchange License, companies can leverage Labuan's favorable regulatory environment and low taxation, making it a leading jurisdiction for cryptocurrency exchanges. The Labuan Financial Services Authority (LFSA) is responsible for licensing and regulating cryptocurrency activities and makes this one of the more attractive destinations for global crypto entrepreneurs. Since the issuance of the license by the LFSA started in 2018, there has been massive interest to register company in Labuan on the part of international cryptocurrency businesses. 

• This license will allow companies to operate a digital asset exchange company which will facilitate trades concerning crypto-to-crypto and fiat-to-crypto. Over 60 companies have successfully secured the Labuan Cryptocurrency Exchange License, marking a notable achievement in the region’s development. 

• Labuan's crypto framework is a legal hybrid the Malaysian law, under certain rules from the Labuan International Business and Financial Centre, combines the Malaysian Financial Services Act of 2013 and the Labuan Financial Services and Securities Act, 2010, combined with the Malaysian AML-CFT law, and the guidelines released by the Financial Services Authority. The latterly created one is supposed to be fully in place by 2025. 

Regulatory requirements to obtain a Labuan Cryptocurrency Exchange License 

• At least one shareholder is needed, which can be a legal person without any residency requirements. 

• At least one director must be appointed, and this individual must be a natural person without any residency requirements. 

• A resident company secretary will be provided by Tetra Consultants prior to the registration of the Labuan company. 

• Establishing a local office is mandatory for companies intending to conduct business in Labuan. Tetra Consultants will facilitate this requirement. 

• Companies incorporated in Labuan as licensed cryptocurrency exchanges must employ a local employee. Additionally, they must meet the minimum annual operating expenditure requirement in Labuan. 

• There must be at least MYR 500,000 (approximately US$110,000) paid-up capital. 

• Appointment of key persons, including directors and a nominated AML officer will ensure that the standards as determined by the regulatory authority are adhered to.  

Steps to obtain a Labuan Cryptocurrency Exchange License 

Our team of experts recommends that you carefully review the following steps involved in the typical process to obtain a Labuan Cryptocurrency Exchange License: 

Step 1: Registration of Labuan entity 

• We will begin the engagement by registering your company in Labuan through the relevant authority. We estimate that the process will take 2 weeks to complete. 

• Upon incorporation of your company, Tetra Consultants will provide you with the certificate of incorporation, memorandum and articles of association, among other corporate documents required. 

Step 2: Preparation of legal documents for license application 

• Once your company is successfully registered, Tetra Consultants' consultants will draft an exhaustive business plan outlining your company's operation and strategies. 

• Our legal and compliance team shall prepare AML/CFT procedures and internal policies that may include technology risk management, corporate governance, and regulatory reporting. 

Step 3: Meeting local economic substance requirements 

• For the additional economic substance requirements, Tetra Consultants will assist you in leasing a local office at the central business district in Labuan. According to Labuan FSA, the office needs to be operational and fully furnished, which is one of the cryptocurrency license requirements in Labuan. Our legal will draft a lease agreement based on the legal requirements stipulated by the local real estate authorities, then signed by all parties. You will then proceed to pay the rent directly to the landlord monthly. 

• Additionally, Tetra Consultants will find at least two suitable staff members for your new company. Our services include initial screenings and interviews, and of course, drafting employment contracts strictly in accordance with the regulations on employment in Labuan. You need only be present for the final interview to select which candidates suit you. Then, you are to pay their monthly salary charges. 

• Further, we will also aid the directors, principal officers, and controllers obtain their 'fit and proper' status. This process requires these people to provide stricter KYC documents, which comprise clean criminal record checks. 

• While there is no mandatory requirement for a resident director, we offer nominee director and shareholder services to help establish your presence in Labuan. 

Step 4: Corporate bank account opening 

• Tetra Consultants can assist you with corporate bank account opening in Labuan with either a local Malaysian or international bank. Our partner banks include RHB, Maybank, Standard Chartered, and OCBC. This process generally takes 4 weeks, during which you will have to travel to Labuan for a face-to-face meeting with the bank. After the account has been opened, the initial paid-up capital must be paid. 

Step 5: Submission of Labuan cryptocurrency license application to LFSA 

• With all elements in place, Tetra Consultants will submit your application for a Labuan digital assets exchange license to the Labuan Financial Services Authority (LFSA). Subsequent to this, the LFSA may request an interview with the directors, principal officer, and controllers. 

• Once the LFSA is satisfied with the application, they will issue an in-principal approval with a list of requirements that need to be met within a specified deadline. These requirements may encompass placing disclaimers on your website or injecting paid-up capital into the corporate bank account, amongst other things. 

• After fulfilling these conditions, the Labuan FSA will grant you the full cryptocurrency exchange license Labuan, as per the crypto exchange rules implemented in the Labuan crypto exchange. 

Conclusion 

• To obtain a Labuan Cryptocurrency Exchange License with Tetra Consultants simplifies your entry into the digital asset market. Our team of professionals will guide you throughout every step, right from company registration to compliance with all local requirements. Through our assistance, you will be able to confidently establish a cryptocurrency exchange in Labuan on a solid foundation for operations and regulatory requirements that leads you to business success. 

• Contact us to find out more about how to obtain a Labuan Cryptocurrency exchange License. Our team of experts will revert within the next 24 hours.