Labuan authorities support innovation and take a progressive approach to attracting fintech companies. There is virtually no income tax – 3%, no VAT, and a high level of confidentiality, as well as simple conditions for company registration. This is the incentive for the opening of representative offices of numerous exchanges, investment funds, banks, and crypto trading platforms from more than 125 countries.

The Labuan Financial Services Authority (LFSA) has been designated as the local supervisor of the financial industry. When all data security and AML compliance requirements are met, companies are granted crypto license Labuan to launch crypto businesses.

The authorities intend to strengthen the growth of the company’s number and become an even more attractive business center. More than 60 banks (BNP Paribas, Goldman Sachs, HSBC) are already registered and operating here, and 70 double taxation agreements have been signed (France, Australia, USA, Japan and others). Labuan is part of the ASEAN (Association of Southeast Asian Nations) blockchain consortium for the development of blockchain technology in the Asia-Pacific region.

In addition, the region has an excellent location, with global financial giants Hong Kong, Singapore, and Indonesia close by.

Advantages of obtaining a cryptocurrency license in Labuan

Favorable tax system.
This jurisdiction has a favorable tax rate on profits – 3% (or a fixed amount of $5000), no VAT, no sales tax, no capital gains tax and royalties, dividends, and no stamp duty.

Fast business registration.
The authorities are interested in the development of innovative businesses, so business registration takes 6 days. It is possible to register for a limited liability company, limited partnership, and unlimited liability company.

Malaysian market.
Labuan has a favorable geographical location between Southeast and East Asia, surrounded by countries where the crypto industry is actively developing (Hong Kong, Singapore – more than 200 fintech companies, Indonesia), and signed several cooperation agreements.

They developed the financial industry.
There are representative offices of the giants of the banking system and exchange trading, there is an opportunity to work with different currencies and payment cards. The financial market regulator LFSA is a member of the FATF group and requires market participants to comply with anti-fraud standards. Obtaining a Labuan crypto license requires compliance with AML procedures. This symbolizes that the interests of investors are protected by international regulations, and this increases credibility among market participants

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Requirements for obtaining a Cryptocurrency License in Labuan

Successfully applying for a Cryptocurrency Exchange License in Labuan is preceded by data collection and regulatory compliance work from the Regulator:

Company Registration.
This region provides an opportunity for non-residents to own 100% of the company. The name of the company must be in Latin letters and have the following designations at the end: Ltd., Corp., Incorp. etc. It is required to have a local office (lease or purchase).

Authorized capital.
To conduct business in this zone, the Regulator has set a minimum amount for the initial capital – from $110,000.

Data Protection.
The LFSA requests organizations to report cyberattacks, unauthorized hacks, and their consequences within 14 days. Every client transaction must be recorded.

Organizational Structure Requirements.
There must be at least one shareholder without residency requirements (a legal entity is allowed to be a shareholder), and managers must be two (only physical persons without residency restrictions). All identification details are provided to the Regulator and the experience of the general managers is confirmed. The LFSA will approve any changes in directors or shareholders that take place. In addition, an external auditor is appointed to review the annual financial statements.

Compliance with AML principles.
Compliance with FATF rules is mandatory for financial organizations. An AML specialist should be appointed in the company, to monitor compliance with the provisions of the Anti-Money Laundering and Countering the Financing of Terrorism Act and the Guidelines of the Central Bank of Malaysia.

License Fee.
Issuance of a crypto license takes place after payment of the state fee – $1500.

Procedure for obtaining a cryptocurrency license registration in Labuan

Companies that decide to conduct fintech activities in Labuan are approved by the LFSA. The state regulator operates based on the Financial Services Act of 2013. To receive a positive response from the LFSA, a sequence of steps must be followed:

  • Stage 1

Collecting documents and fulfilling the conditions for registration of a legal entity

The registration process is fairly quick if all the company documents are submitted:

  • Business plan, which will detail the company’s activities in the crypto market, risk management procedures, forecast of financial performance, and further development of the company
  • All identity documents and place of residence of directors and owners, as well as data confirming their professional experience in the financial markets (minimum 2 years), are collected.
  • A secretary has been hired
  • Resolved the issue of the place of business registration (local office is mandatory)
  • Stage 2

Registration of the company name

It is forbidden to have in the name of the company:

  • Words “bank”, and “fund” if the company will not receive a license for such type of activity
  • Words indicating state bodies are “municipality” or royal family.
  • Letters from the Latin alphabet are used in the name or a translation is provided.
  • Stage 3

AML/KYC procedures are prescribed

The regulator needs to ensure that the business will comply with all international regulations. Therefore, prescribed AML/KYC procedures and compliance measures are submitted.

  • Stage 4

Authorized capital

In Labuan, there is a minimum initial capital requirement of $110000 for businesses.

  • Stage 5

Apply to the LFSA for application

The Regulator has 6 months to evaluate all documents. Also, if necessary, a director or AML specialist can be called for an interview and background check to operate in this financial market.

  • Stage 6

Opening an account

On average, it takes up to 4 weeks to open a corporate account. It is authorized to open accounts either in Malaysia or Labuan. Banking giants active here include RHB, Maybank, and CIMB Group Holdings.

  • Stage 7

Obtaining a decision from the LFSA

LFSA may issue a permit with a list of requirements, provide additional documents, and set a deadline for their fulfillment, only after that issue a full license. Labuan crypto license application fee is $1500.

Licensed companies are allowed to work with residents and use local currency.
It can take about 3-4 months for the LFSA to evaluate all the documents.

Crypto license consultant in Labuan


Eugen Fomin

Documents required to apply for a crypto license in Labuan

When issuing an official permit, the Regulator analyzes a list of materials:

  • The business plan of the organization, which describes the forecast of activity for 3 years
  • AML/KYC procedures and enforcement measures
  • Information on managing managers and shareholders (passport data, place of residence, and proof of work experience of at least 2 years)
  • Company documents (certificates, articles of association, contracts, minutes)
    Documents confirming that the company has a local office (lease, purchase).
  • Preparation and collection of documents, and account opening may take up
    to 2 months.
  • Application for a cryptology license to the LFSA takes up to 7 days, and evaluation of data submitted to the Regulator takes up to 6 months. The LFSA then sets a deadline for completing the requirements for a full license.

The LFSA has the right to request additional documents.

Cryptocurrency Regulation in Labuan

Taxation in Labuan

For fintech companies, Labuan is a real tax paradise:

  • 3% on profits or a flat amount of about $5000
  • Annual fee of $1500.
    No tax on gains, dividends, inheritance, stamp duty, royalties, or interest tax.

    But, among the mandatory requirements for cryptocurrency companies is to undergo an independent audit, the LFSA must approve a specialist auditor. Every year, cryptocurrencies submit audited financial statements to the LFSA along with balance sheets, income statements, cash flow statements, and notes on financial activities.

    FAQ about cryptocurrency license in Labuan

    Is it legal to trade cryptocurrencies in Labuan?

    Yes, based on the license issued by the Labuan Financial Services Authority (LFSA).

    How do I get a cryptocurrency license in Labuan?

    To obtain a license to operate in innovative markets, you need to prepare all the required documents and send the application to (LFSA).

    How much does it cost to get a cryptocurrency license in Labuan?

    The state application fee is $1500, but it is worth considering several other factors that can affect the total cost.

    How long does it take to get a cryptocurrency license in Labuan?

    The Labuan Regulator has a timeframe of 3 to 6 months to conduct a full data analysis, with the average process taking about 4 months.

    Can foreign companies apply for a cryptocurrency license in Labuan?

    Yes, 100% foreign companies are allowed to apply in this region.

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