Labuan International Business and Financial Centre (Labuan IBFC) approved 46 digital financial services operators in the first half of 2020, including three digital banks, two digital securities exchanges and 19 crypto trading platform providers.
Datuk Danial Mah Abdullah, the director general at the Financial Services Authority (Labuan FSA), told the second Connecting Digital Ecosystems Asia (CoDE Asia 2020) that Labuan's “digital family” was growing due to the progressive approach it takes in embracing the digital revolution. Labuan recognises that the nature of all Labuan legacy licences may be structured to be a digital variant for as long as all entry criteria, regulatory requirements and supervisory needs can be met, he said.
“The COVID-19 pandemic has also profoundly impacted the international market and businesses,” added Mah. “It has forced businesses to pivot as the old ways of doing things will not work anymore. Many organisations have had to digitally transform their operations to meet customer expectations and needs.”
Labuan IBFC encourages intra-Labuan IBFC transactional activities through the collaborations between its industry players in innovating product or service offerings, noted Mah, whether in the digital or conventional markets.
He also stressed the importance of the Labuan FSA ensuring the maintenance of regulatory and business standards. The regulator is constantly scanning the environment for new emerging risks and possible threats that would undermine the centre's stability, he said, including cyber and money laundering risk.
Labuan IBFC’s debut as a digital friendly jurisdiction began in 2017 with just one licence. Since then it has expanded to include a wide range of digital businesses and players, from digital banking and insurtech to intermediaries such as robo-advisory, digital asset exchanges, crypto trading platforms, tokenisation licences and e-payment systems.
Farah Jaafar-Crossby, chief executive of Labuan IBFC, Labuan's market development arm, 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.”
Labuan FSA's recently launched digital banking framework demonstrates the jurisdiction's progressive and facilitative stance, she added.
Labuan International Business and Financial Centre, Labuan IBFC, Farah Jaafar-Crossby, Datuk Danial Mah Abdullah, Labuan Financial Services Authority