As an innovative and forward-looking intermediation centre, Labuan has kept pace with the rapid changes wrought by digital innovation.
Unlike other jurisdictions, Labuan IBFC does not discriminate against digital. The ethos we adopt is that digital is an enabler of business in the first instance – it is a business process.
This open approach means that possible license holders need to comply with existing requirements but with an added layer of explanation to the regulators as to how the digital element plays a part in the entity’s operations.
Based on this approach, existing Labuan-licensed entities that wish to incorporate any innovative financial services (IFS) activities into their current business operations are simply required to apply to Labuan FSA noting their change in business plan.
It helps that Labuan already offers one of the widest range of structures and solutions available in Asia. These existing structures from licenses in money broking, credit token, private fund management and protected cell companies means that companies only need to build a strong business case for a digital ‘wrapper’ to an existing business.
This has eased the set-up of innovative financial service providers from digital banking licences to insurtech, robo-advisory, digital exchanges, crypto trading platforms, e-payment systems and blockchain tokens. In 2019 alone, more than 30 digital related licences were approved to operate in Labuan. These businesses were drawn by Labuan’s stable regulatory and legal framework, combined with a pro-business environment.
The key to this approach is that Labuan Financial Services Authority is a facilitative one-stop regulator and is able to process each application on its merit individually. That the jurisdiction only operates in the wholesale financial markets is a huge advantage.