Crypto license in
Labuan 2024
Labuan, federal territory in Malaysia has become a magnet for digital asset entrepreneurs due to its progressive regulations and business-friendly climate. Labuan’s low operational costs and full compliance with the legal system make it an attractive jurisdiction for many in the cryptocurrency sector. Legalaes is here to guide you through the process of registering a cryptocurrency company and obtaining a Labuan Crypto License, ensuring a smooth and efficient setup for your business.
Regulations for Crypto license in Labuan
The Labuan Financial Services Authority (LFSA), established under the Labuan Financial Services Authority Act 1996, operates as the regulatory and supervisory body for financial entities in Labuan including crypto related activities. Its key goals include:
- Developing Labuan into a premier international business and financial services hub.
- Acting as the primary regulatory, supervisory, and enforcement body within Labuan’s international financial services sector.
- Monitoring financial activities.
- Establishing regulations and ensuring adherence to standards.
- Managing the issuance and revocation of licenses as required.
Taxation of cryptocurrency companies in Labuan
- The corporate income tax is competitively set at 3% on global net income.
- Dividends are exempt from withholding tax.
Types of crypto licensing in Labuan
| Permitted activities | Description of activity |
|---|---|
| Cryptocurrency Exchange |
|
| Crypto-to-Crypto and Fiat-to-Crypto Trading |
|
| Listing Digital Assets |
|
| Digital Asset Custody |
|
| Transaction Settlement |
|
| Token Issuance |
|
| Brokerage Fees |
|
Overview of requirements to obtain crypto license in Labuan
- Form a company under the Labuan Companies Act to ensure legal operation within the jurisdiction.
- Prepare necessary legal documents required for applying for crypto license in Labuan.
- Appoint a minimum of two directors, Anti-Money Laundering (AML) officer and a Local Secretary to oversee compliance and operations.
- Secure a minimum paid-up capital of RM500,000 (around 110,000 USD) to demonstrate the company’s financial stability.
- Fit and Proper Standards: Ensure all team members meet high standards of integrity and professional conduct, adhering to fit and proper criteria.
- Establish a physical business presence in Labuan, including essential functions like record-keeping and administrative activities.
Estimated time frames to obtain crypto license in Labuan
Company formation
1-2 weeks
Documents preparation
4 weeks
License application and approval
8-12 weeks*
* The timeline also depends on the workload of LFSA and any clarifications and queries that LFSA may request in relation to the application
Legal services for obtaining Crypto license in Labuan
Basic Package
available on request
- Company registration
- Provision of Legal Address for 1 year
- Corporate documents
- AML/KYC Policy (Anti-Money Laundering/Know Your Customer)
- Crypto license obtainment
- Communication with regulator authorities
- Assistance with employment of AML officer and Directors
- Legal Support throughout the entire project
This package meets the minimum regulatory requirements for establishing a licensed crypto company in Labuan
Additional services on request
- Accounting services
- Additional corporate account
- Assistance with share capital contribution
- Bank account for keeping client’s funds (safeguard)
- Apostilled corporate documents
- Business plan
- AML/CFT Training material
- Legal framework for launching Your Token
Ready-Made solution
available on request
- Registered company
- Legal address for 1 year
- No debts, no liabilities – clean company
- Registered share capital
- Active license
- Corporate documents
- Assistance with transfer of ownership
Eriks Fijalovs
Head of Blockchain and Crypto
Requirements for Crypto licensing in Labuan
List of required documents
- Curriculum Vitae (CVs): Provide CVs for shareholders and team members to highlight their experience and qualifications, ensuring a competent and skilled workforce.
- Reference Letters: Obtain reference letters for each key individual to verify their professional background and integrity, thus enhancing the business team’s credibility.
- Business Plan: Submit a comprehensive business plan that details business goals, service offerings, target markets, revenue forecasts, financial performance projections, manpower requirements, and equity structure, demonstrating the company’s strategic and operational plan.
- Proof of Funds: Show sufficient financial resources to support company operations, ensuring sustainability and stability.
- Manuals and Policies: Document and submit comprehensive internal policies and procedures to ensure regulatory compliance and maintain operational integrity, including Anti-Money Laundering (AML) and operational manuals.
- Business Address Documentation: Provide evidence of the business’s physical presence in Labuan with documentation of the main place of business and an address for service. If applicable, include proof of a business address outside Labuan.
- Fitness and Propriety Standards: Certifying that all personnel adhere to high standards of fitness and propriety, reinforcing organizational trustworthiness and ethical conduct.
- Auditor Engagement: Engaging an approved external auditor to conduct annual audits, validating the financial health and operational transparency of the company.
Share Capital and Government Fees
- Minimum Paid-up Capital: For crypto license in Labuan it is necessary to contribute a minimum paid-up capital of 110,000 USD or 500,000 RM.
- Application Fees: For submission application for crypto license in Labuan it is necessary to pay 10,000 USD as specified by Labuan FSA.
Personnel Requirements
- 2 Directors: tasked with the ongoing responsibility of adhering to regulatory standards and compliance.
- Company Secretary: Appoint a company secretary who resides in Labuan and is responsible for monitoring compliance with laws and the company’s obligations.
- AML Officer: Appoint an Anti-Money Laundering (AML) officer to ensure compliance with AML regulations and to oversee related processes and reporting.
Business premises requirements
- Setting up and maintaining a registered office is essential for obtaining crypto license in Labuan. It demonstrates a commitment to operating within the regulatory framework and ensuring proper record-keeping practices are adhered to.
Roadmap of obtaining crypto exchange license in Labuan
For more detailed road map of the project and commercial offer – get in touch with our crypto professional.
Eriks Fijalovs
Head of Blockchain and Crypto
Initial Setup
The initial phase focuses on thorough due diligence for all company stakeholders, ensuring compliance with Labuan’s regulatory framework. Legalaes assists in preparing essential documents, including agreements, business plans, and compliance manuals, customized to meet Labuan’s specific crypto regulations. This step is important for organizing a comprehensive application package for submission to the Labuan Financial Services Authority (LFSA).
Company incorporation
This step involves incorporating a company in Labuan under the Labuan Companies Act, ensuring a well-defined shareholder structure. This includes detailing team members and establishing the official company address in Labuan.
Submission
During the submission phase, attention shifts to a meticulous review and submission of the complete application package to the LFSA for crypto license in Labuan. Simultaneously, the process for opening a bank account, accommodating both local and foreign currencies, is initiated.
HR & Compliance Team
Legalaes offers options for selecting experienced local compliance teams familiar with Labuan’s regulatory environment. This extends to supporting the recruitment process, ensuring that the selected personnel meet LFSA requirements.
Follow-Up
Ongoing communication with the LFSA is crucial to address any inquiries or requests for additional information. The setup of the bank account continues, with a focus on providing any required documentation.
Approval
Upon securing approval, Legalaes assists in completing the formalities to receive the official Money Broking License with an extension to crypto services from the LFSA, including acquiring the Certificate of Incorporation.
Operational Launch
With the license obtained, companies can commence their operations under Labuan’s regulatory framework. Legalaes remains supportive, offering continuous assistance in compliance monitoring and regulatory reporting to ensure adherence to LFSA guidelines.
Advantages of the Crypto license in Labuan
01
Cost-Efficient Maintenance
Enjoy reduced financial liabilities with low maintenance fees, making it a cost-effective solution compared to other jurisdictions. This advantage helps in minimizing operational costs without compromising on the quality of financial services provided.
02
Tax Optimization
Benefit from a favorable tax regime with a corporate tax rate of just 3% on net profits. Additionally, there is no withholding tax on interest, management fees, royalty fees, or technical fees, significantly enhancing your company’s profitability and facilitating quicker growth and expansion efforts.
03
Global Market Access
Labuan allows cryptocurrency exchanges to interact with international markets. Companies can establish a presence in Labuan and offer their services to customers worldwide, expanding their audience and potential customer base.
04
Comprehensive Permitted Activities
With a single crypto license in Labuan, gain the ability to engage in a wide range of crypto-related activities, from operating exchanges to providing custodial services and conducting ICOs. This flexibility allows your company to diversify its offerings and provide services to a broader clientele without the need for multiple licenses.
05
Reputation
Official crypto licensing in Labuan enhances a company’s perception among potential clients and partners, raising its status in the cryptocurrency industry. The LFSA license serves as a sign of quality and reliability, confirming that the company operates in accordance with international standards and regulatory requirements.
06
Moderate Compliance Requirements
The regulatory framework for the Labuan crypto license requires moderate compliance, providing a balance between careful oversight and operational flexibility. This approach reduces the burden of compliance while maintaining high standards of financial conduct and integrity.
Links for legislation related to Crypto license in Labuan
This act forms the legal foundation for financial and securities services in Labuan, managed by the Labuan Financial Services Authority (LFSA). Its goal is to enhance and develop Labuan as a global financial hub, ensuring the integrity and stability of its financial system. Covering a broad spectrum of financial activities such as banking, insurance, and Islamic finance, it provides a comprehensive regulatory framework that supports business flexibility and adherence to international standards.
This act outlines measures to combat money laundering and terrorism financing in Labuan. It specifies the responsibilities of financial institutions in identifying, preventing, and reporting transactions suspected of being linked to criminal activities.
This act governs the incorporation, regulation, and dissolution of companies in Labuan. It is designed to facilitate business operations, providing a framework for the establishment and management of both domestic and international companies in Labuan.
This document provides detailed guidelines for obtaining a money broking license in Labuan, including the regulatory requirements and procedures to be followed to ensure compliance with Labuan’s financial regulations.
This act establishes the Labuan Financial Services Authority (LFSA) as the regulatory body for financial services in Labuan. It defines the powers and functions of the LFSA, including the oversight of financial institutions, issuance of licenses, and enforcement of financial services laws. The act aims to ensure effective supervision of Labuan’s financial services sector, promoting its development while safeguarding the interests of investors and the public.
FAQ about Crypto license in Labuan
1. Why choose Labuan for a crypto license?
Labuan provides a competitive license that is recognized worldwide and is particularly popular in the Southeast Asia region. Many crypto exchanges have chosen Labuan as their primary location due to its straightforward and widely acknowledged licensing process.
2. Will having a license from another country affect my application in Labuan?
Possessing a license from another country can be advantageous for your Labuan application. It can expedite the process and demonstrate that your business adheres to high standards, making your company more reputable in Labuan.
3. How can my clients verify the authenticity of my Labuan license?
Clients can verify the authenticity of your Labuan license by checking the official registry on the Labuan Financial Services Authority's website, where all licensed businesses and their contact details are listed.
4. How long does it take to get a license in Labuan?
Obtaining a license can take between 12 to 18 weeks, depending on your business’s preparedness and specific model. This timeframe allows the regulator to review your application thoroughly and request any additional information if necessary.
Each of our projects receives unique and tailored solutions in accordance with the initial objectives and vision of the shareholders.
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