Labuan International Business and Financial Centre (Labuan IBFC) announced a record first half of 2020 for new Digital Financial Services (DFS) operators, marking a significant influx of digital financial service providers into the jurisdiction.

As at 30 June 2020, Labuan FSA had approved a total of 46 Digital Financial Services operators, including three digital banks, two digital securities exchanges and 19 cryptocurrency trading platform providers.

Labuan FSA's Digital-First Approach

"This segment has grown significantly in the last four years in tandem with our aspirations to have the market embrace digitalisation as the future of conducting business," said Labuan FSA Director-General, Datuk Danial Mah Abdullah. He noted that the "digital family" has grown due to the progressive regulatory approach taken — recognising that Labuan's legacy licences may be structured as digital variants, provided all entry criteria, regulatory requirements and supervisory needs are met.

Currency and Tax Neutrality as a Competitive Advantage

Farah Jaafar-Crossby, CEO of Labuan IBFC, said: "Labuan IBFC offers currency and tax neutrality, as well as proportionality in regulation — these key elements are essential for digital service providers to thrive under their demanding and competitive operational parameters."

A Growing Digital Ecosystem

Labuan IBFC's journey as a digital-friendly jurisdiction began in 2017 with a single licence. By 2020, it had expanded to encompass a wide range of digital businesses — from digital banking and insurtech to robo-advisory, digital asset exchanges, cryptocurrency trading platforms, tokenisation licences and e-payment systems. The Covid-19 pandemic accelerated this digital transformation, with many businesses pivoting to digital operations to meet evolving customer expectations.

Source: International Investment