How to Apply for a Labuan Cryptocurrency Exchange License | QX Trust | Offshore Labuan Consultants

The Malaysian government is warmly welcoming Fintech industry entrepreneurs to their land. New technologies like blockchain, cryptocurrency are slowly dominating due to Malaysian Government liberalisation approach. This has attracted many investors to start the process of obtaining a Labuan Cryptocurrency exchange license. And QX Trust Co. Ltd. is here to guide you through each and every step of this process.

But first, let's discuss some of the advantages of Labuan Cryptocurrency exchange license

  • You don't require any Malaysian partner. Therefore, 100% foreign ownership.
  • 3% tax on its net profits per year as reflected in its audited accounts Income tax.  
  • No taxes on interest, license fees, capital growth, royalties, heritage, maintenance and dividends.
  • Access to more than 70 Malaysia tax treaty partners.
  • No tax on acquisition of property (Stamp duty)
  • Reduced taxes for overseas workers by 50% (like for professionals or managers)
  • 100% tax exemption on director's fees for foreign directors
  • Work-visa in Malaysia for a period of 2 years (renewable)

Conditions that should be met by every entrepreneur before getting permission:

  1. Must show expertise in cryptocurrency exchange with at least 3 years of good track record and sufficient experience in the field
  2. Must show active permit for the exchange of cryptocurrency from other jurisdictions with approval from home authority with a letter of consent
  3. Must show approval of cryptocurrency exchange from Central Bank of Malaysia under Financial Services Act 2013.

Documents Required to apply for Labuan Cryptocurrency Exchange License:

  1. 3 year business plan that highlights marketing strategies and financial forecast.
  2. Profile of all shareholders and directors.
  3. 2 year audited accounts of current registered company
  4. KYC, AMLA and Operations Manual/Procedures.

Regulatory and Operational Requirements for the License:

  1. Paid up capital of minimum MYR 500,000 along with a certificate of evidence from banks in Malaysia and Labuan.
  2. Must have a fully functional office in Labuan. All transactions should be done to, through and from the territory.
  3. Transaction can be done in any foreign currency, including MYR.
  4. Transaction with Malaysian residents is authorised including dealers approved by Malaysian Exchange Control.
  5. Any malfunctions or interventions at the client interface must be reported to Labuan FSA along with an impact analysis report within 14 days of the incident.
  6. An approved external auditor is required to carry annual audit of business operations.
  7. A separate account should be maintained for clients' transactions. All withdrawals should to be reported within a period of 3 working days.
  8. Documentation of all agreements and contracts with any client or company.
  9. Should be aware of AML/CFT Act and Guidelines issued by Central Bank of Malaysia and Labuan Authority via provision of a compliance officer.
  10. Should get prior approval from Labuan FSA incase any changes are made to directors, shareholders, office location or any other arrangements.
  11. Pay a license fee of MYR 5000 to Labuan FSA annually.

The application requires approximately a month or two for approval. A separate meeting with a Labuan FSA might happen to understand certain aspects about the company.

At QX Trust, you don’t have to worry about approval. From consultation on eligibility and guiding you on client profile write-up to profiling your documents and helping you a draft a clear & concise business plan, we are here for you on every step of the way.