The Labuan LFSA has made significant changes to the rules which govern their regulation of forex brokers, known locally as Money Broking licenses. These changes also impact cryptocurrency exchanges which are classified in Labuan as Digital Asset Service Providers. We outline how licensed forex & CFD brokers as well as cryptocurrency exchanges in Labuan will be impacted by these regulatory changes.

Paid Up Capital Increases by Over 100% for Licensed Cryptocurrency Exchanges & Forex Brokers

Licensed Money Broking firms in Labuan will shortly face an increase in paid up capital requirements. The initial hike will raise capital requirements up to 1,000,000 Malaysian Ringgit which is roughly equivalent to $225,000. Cryptocurrency exchanges, classified by the LFSA as Digital Asset Service Providers must hold a slightly higher amount at 1,500,000 Ringgit, equivalent to roughly $325,000. Those looking to apply for a forex broker license in Labuan will now be subject to these changes while existing forex brokers & cryptocurrency exchanges will see the capital increased in a series of annual phases, the first starting in 2025.

Cryptocurrency Exchanges & Brokers in Labuan Will Be Subject to Shareholder Reserve Requirements

In addition to a hike in capital requirements, shareholders must also commit 20% of the total capital requirements as an additional reserve in order to adequately fund any potential shortfall should net shareholder funds fall below the minimum requirements due to losses. This amount equates to roughly $50,000 US dollars for FX & CFD brokers; $65,000 for cryptocurrency exchanges.

Licensed Forex Brokers Face Restrictions on CFDs

The LFSA has restricted the ability for licensed Money Broking firms to offer derivatives/CFDs of non-foreign exchange assets like indices, commodities, and individual shares; Digital Service Providers are able to offer CFDs on cryptocurrency as long as the leverage remains at 1:1.

Mandatory IT Staff Member Requirement 

Currently all licensed forex brokers & cryptocurrency exchanges must employ two local directors. As a result of changes ushered in by the LFSA, a dedicated IT team member must now be a part of the overall company structure. While it is not directly mandated, we recommend placing the director locally in Labuan.

Atomiq Consulting – Your Partner for Digital Asset & Forex Broker Licensing

To date, our group has helped more than 15 brokers obtain licensing in Labuan, Malaysia. Our attention to detail, expertise and industry knowledge make Atomiq Consulting the best choice for obtaining a forex broker license in Labuan Malaysia.

To learn more about our services, don’t hesitate to contact us today!