Labuan Crypto / (Digital Financial Service Provider) License
Labuan Crypto License Terminology
When exploring crypto licensing options in Labuan, certain terms are often used interchangeably. In addition, some acronyms are used which are worth detailing in order to fully understand the licensing process.
LFSA: Labuan Financial Services Authority
The official regulator of crypto / digital asset services in Labuan is the Labuan Financial Services Authority, which is often abbreviated as the LFSA.
Labuan Digital Financial Service Provider License
The official term used by the LFSA to classify crypto firms in Labuan. The term Labuan crypto license is often used interchangeably to represent the Digital Financial Service Provider license category.
Labuan Digital Financial Service Provider License Highlights
- As the finance hub of Malaysia, Labuan is the most recognized digital asset licensing jurisdiction in Southeast Asia
- The Labuan Financial Services Authority (LFSA) regulates crypto in Malaysia
- Capital requirements set 1.5 million RM (~$300,000)
- Local office plus directors are required
- Leverage capped at 1:1
- Taxes set at 3% of net profits
- 6 – 7 months license approval period
- Ability to also operate as a derivatives / FX broker
- Labuan regulated brokers are prohibited from soliciting investors based in Malaysia
Labuan Crypto / Virtual Currency License Requirements
- Paid up capital of 1,500,000 Malaysian Ringgit (~$300,000 USD)
- Minimum annual expenditure in Labuan of RM 100,000 (~$20,000)
- A physical office located in Labuan
- Minimum of 2 local directors based in Labuan
- Annual financial & technology audit
- Directors should demonstrate experience in financial services and be prepared to provide reference letters
- A local Labuan company
- A local bank account is required in order to receive license approval
How to Get a Cryptocurrency Exchange License in Labuan?
- Initiate a call with Atomiq Consulting to discuss Labuan digital asset licensing in more detail. During the call we’ll go over the requirements, costs, and timelines for license approval.
- After the first discussion, we’ll send a formal proposal. If the terms are agreed upon by both parties, we’ll commence with the license application process.
- The first step in the application process is to register a Labuan International Business Company (IBC) with the Labuan FSA.
- During the account registration process, our team will prepare a detailed business plan covering your firm’s services, market scope, technology, and AML/CFT compliance.
- We’ll review the directors within your organization to ensure they possess the relevant experience needed for LFSA approval.
- Implement comprehensive KYC and AML procedures that align with Labuan FSA guidelines.
- We’ll formally submit the application with the LFSA
- After the application has been submitted, we’ll update your team with feedback from the LFSA including clarifications or additional documentation requests.
- The LFSA will issue a pre-approval upon which 90 days are granted to open a local office, hire staff, and deposit the paid up capital.
- Open a local bank account in order to deposit required capital.
- Receive approval and begin operations as a regulated crypto exchange or service provider.
How Much Does It Costs to Obtain a Labuan Crypto License?
Based on our professional experience, the recommended budget for a Labuan crypto license is $350,000 – $400,000 USD. Note that the majority of this budget consists of capital, some of which can be spent throughout the fiscal year. See below for a full breakdown.
| Item | Details |
|---|---|
| Capital | 1,500,000 Malaysia Ringgit (~$300,000) |
| Local Office | Starting at $500 USD / month |
| Monthly Staff |
Starting at $2,500 – $3,000 USD / month |
| Annual Audit & Accounting Fees | $3,000 – $5,000 per annum |
| License Application & Government Fees | $10,000 – $15,000 |
| License Consultation Fee | Contact our team for a price quote |
| Taxes | 3% of net profits |
How Long Does it Take to Apply For a Labuan Crypto License?
Our experience has shown that a new application for a LFSA Digital Financial Service Provider license will take approximately 6 – 7 months. This estimate is based on our positive track record of licenses approvals. We are happy to provide references if needed.
Labuan Crypto License Application: Timeline Breakdown
- Gather KYC: 1 month
- Prepare the application, draft documentation, company formation: 2 months
- Submit application & await LFSA feedback: 3 months
- Apply for bank account: 1 month
How Does Labuan Compare to Other Jurisdictions?
| Parameter | Labuan | Mauritius | EU / MiCA |
|---|---|---|---|
| Capital | $300,000 | $150,000 | €150,000 |
| Approval Timeline | 6 – 7 months | 5 – 9 months | 12 – 16 months |
| Taxes | 3% | 3% | 12.5% |
| Bank Quality | Excellent | Acceptable | Mid Tier |
| Regulator | LFSA | FSC | CySEC, MFSA |
| Asset Tokenization | Yes | Yes, with Limitations | Yes, with Limitations |
To Learn More About Applying for a Digital Financial Service Provider License in Labuan – Contact Us Today!
Starting a Crypto Exchange in Labuan – Check Out Our YouTube Channel
Why Consider a Labuan Cryptocurrency Exchange License?
Atomiq Consulting – Your Crypto License Consulting Partner
Established in 2014, Atomiq Consulting has established itself as an industry leader in financial services licensing. Given our many years of experience assisting forex & CFD brokers in Labuan, Malaysia, it was a simple transition for our team to also focus on cryptocurrency regulation. With intimate knowledge of the region, decades of regulatory experience and a solid background in financial services regulation, Atomiq Consulting is the ideal partner to assist your blockchain project / cryptocurrency exchange with a Digital Financial Service Provider license in Labuan, Malaysia.
Who Should Consider a Labuan Crypto License?
- Crypto exchanges looking to establish a presence in Southeast Asia
- Firms with a budget of at least $400,000 USD
- Derivatives brokers looking to expand into crypto or offer tokenized assets under a single license / regulatory framework
- Digital asset businesses seeking access to quality banking and payment services
Schedule a Call With a Consultant Today!
If your exchange is interested in obtaining a cryptocurrency license in Labuan, our team can help. Don’t hesitate to reach out to us in order to discuss timelines, fees, and any other questions!
Key Takeaways for Obtaining a Labuan Crypto License in Malaysia
- The ideal destination for crypto regulation in Southeast Asia
- Crypto is regulated by the Labuan Financial Services Authority (LFSA)
- License is classified as a Digital Asset Service Provider
- Access to excellent local banking options
- ICOs and the issuance of stablecoins are permitted
- Directors should demonstrate experience in financial services and be prepared to provide reference letters
- Capital requirements recently increased to 1.5 million MR
Labuan Crypto Regulation FAQ
Are there any crypto exchange licenses in Malaysia for sale?
In addition to license consultation, we can also assist you in acquiring a fully licensed forex brokerage. Check out our marketplace to see the current crypto exchanges for sale in Malaysia.
Are Labuan licensed cryptocurrency exchanges able to solicit Malaysian clients?
No, investors from Malaysia are not allowed to open an account with an LFSA licensed Digital Financial Service Provider.
What is the difference between a Money Broker and a Digital Financial Service Provider?
Licensed Money Brokers offer conventional assets such as stocks, futures, bonds and foreign exchange while Digital Financial Service Providers primarily focus on cryptocurrency. It’s worth noting that a licensed Money Broker is able to upgrade permissions in order to offer cryptocurrency. In the case where a Money Broker upgrades license permissions, it would also be considered a Digital Financial Service Provider.
How can one search for licensed digital financial services providers in Labuan?
A list of approved crypto exchanges in Malaysia can be found in a directory on the Labuan FSA website.
How long does it usually take to obtain a cryptocurrency license in Labuan, Malaysia?
A general estimate is 4 – 6 months once all supporting documentation has been provided. It will take approximately an additional month to receive bank approval.
Is it possible for Labuan Digital Financial Service Providers to launch an ICO / issue tokens?
Yes, regulations permit the launching of new tokens.
Does Labuan offer a “fast track” license application scheme?
Several years ago this option was offered by the LFSA but has since been discontinued.
What does Labuan FSA stand for?
FSA stands for Financial Services Authority. The Labuan FSA (LFSA) regulates digital assets / cryptocurrency in Labuan, Malaysia.
What regions offering cryptocurrency regulation are similar to Labuan, Malaysia?
Japan is the most well known regulator of digital assets in Asia, however, the process and requirements are more time and cost intensive when compared to Labuan. Cryptocurrency exchanges looking for a faster path to regulation will be more satisfied with Labuan than Japan.
Are there any restrictions on the issuance of stablecoins in Labuan?
No, licensed exchanges are able to issue stablecoins.
Blog Posts
Kenya’s Fintech Gateway
Kenya has long been celebrated as the birthplace of mobile money, but today its fintechecosystem is far more sophisticated. With […]
View More
A Global Overview of Forex Broker License Regulation
Whether you are an entrepreneur interested in starting your own forex white label, or an existing forex broker, it’s crucial […]
View More