Binance's route back
Binance says it is working with Malaysian regulators on a licensed setup in a market where its website and apps are currently blocked. The company told Bloomberg, "We have been jointly engaging the Securities Commission Malaysia and Bank Negara Malaysia over the last ten months, on a licensed pathway to offering our products and services into Malaysia."
Talks cover the "viability and structure of licensed business model in Malaysia," though the exchange did not specify the exact license under consideration. Approval would give Binance a formal way back into a country where restrictions have stretched for more than five years.
The rulebook it needs to clear
In July 2021, the Securities Commission ordered Binance to stop operating in Malaysia after finding it was then running a digital asset exchange illegally. The directives also required a halt to all media and marketing in the country and restricted Malaysian investor access to Binance's Telegram group.
Signals have whipsawed in 2024. The regulator removed Binance from its Investor Alert List this year, then placed it back on the list earlier this month without saying why.
New questions surfaced around Binance's peer to peer marketplace. In September, lawmaker Lim Guan Eng asked the Securities Commission to examine whether the P2P platform was enabling ringgit transactions through ads listed under another currency. His office circulated the letter on Saturday "in light of the recent Binance security incident."
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The security shock and Binance's response
This week, Binance revealed that up to $6.3 billion may have been impacted in what has been labeled the largest known crypto hack. The exchange suspended withdrawals and said it would cover all losses, while fuller details have yet to emerge. The episode arrives amid broader concern about hacking risks in the age of artificial intelligence.
On the P2P issue, Binance said it proactively took down one Papua New Guinea kina marketplace that had been informally linked to the ringgit, framing the step as work undertaken with the Securities Commission. It added that the latest complaint centered on a single ad posted by a user from outside Malaysia on the Romanian leu marketplace, and that no other products on the platform were pegged to or used as substitutes for the ringgit.
"No platform, business or control mechanism can fully prevent bad actors determined to circumvent the rules of a marketplace," a Binance spokesperson said. "We take this seriously, but we do not believe an isolated case like this reflects any sustained effort to circumvent Malaysian law." The company said it remains committed to working with Malaysian regulators to bring its services to the country in a compliant manner.
Why it matters for investors
If regulators greenlight a license, Binance would gain a compliant route to resume services in Malaysia. Until then, the 2021 cease order, the recent return to the Investor Alert List, scrutiny of the P2P marketplace, and the multibillion dollar breach all keep regulatory and operational risk front and center for any crypto exposure in your portfolio.
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