# Labuan forex and digital asset licence: what a prop firm needs.

> Labuan FSA money-broking and digital asset licences: USD 500 application, USD 5,000–10,000 a year, MYR 1m capital, substance rules, 3% tax, banking.

- Source: https://pipvalley.com/jurisdictions/labuan
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-12

**Short answer:** Labuan's "forex licence" is a Labuan FSA money-broking licence, and digital assets are added to it: USD 500 to apply, USD 5,000 a year (USD 10,000 with digital assets) from 1 Jan 2026, MYR 1m–1.5m paid-up capital. The 2024 guideline bars licensees from proprietary trading and targets institutional and high-net-worth clients. Labuan trading profits are taxed at 3% if substance rules are met.

## At a glance

- **Regulator and licence:** Labuan FSA licenses money broking under the Labuan Financial Services and Securities Act 2010: "arranging transactions between buyers and sellers in the money or foreign exchange markets as an intermediary" for brokerage fees. [1]
- **No proprietary trading:** Money broking guideline (9 Sep 2024): licensees "are not permitted to speculate or engage in proprietary trading"; CFDs on underlyings outside money and FX markets are excluded. [2]
- **Digital assets:** Digital asset broking is added to a money-broking licence (para 6.2); Labuan entities need Labuan FSA's prior approval before any digital financial services activity. [2][8]
- **Clients and leverage:** Aimed at institutional and high-net-worth clients; maximum leverage 100:1 for FX and 1:1 for digital assets; retail clients "should make up less than half of the portfolio". [2][3]
- **Fees from 1 Jan 2026:** Application USD 500; annual fee USD 5,000 (money broker), USD 10,000 (money broker, digital asset), USD 2,500 (securities licensee); fast-track processing USD 1,500. [9]
- **Capital:** Paid-up capital MYR 1,000,000 for FX broking, MYR 1,500,000 with digital assets, deposited with a regulated bank in Labuan or Malaysia; at least two board members. [2]
- **New rules:** Guidelines on the Management of Digital Money Broking Platform take effect on 1 Jan 2027; Labuan FSA announced tighter money-broking oversight on 1 Sep 2026. [5][6]
- **Substance:** Labuan money brokers need 2 full-time employees and MYR 100,000 annual operating expenditure in Labuan; the board must meet in Labuan at least once a year. [10]
- **Tax:** 3% of audited net profits for Labuan trading activity; 24% if substance regulations are not met; non-trading activity is not taxed under the Act. [11]
- **Flat-tax option gone:** The election to pay MYR 20,000 instead of 3% was removed, generally from year of assessment 2020 (ACCA). [12]
- **Company:** Every Labuan company needs a resident secretary from a Labuan trust company; annual fee for a Labuan company is USD 1,000 from 1 Jan 2026. [14][9]
- **Onshore limits:** The Exchange Control Act 1953 prevails over the LFSSA; ringgit business or Malaysian clients need onshore approvals before starting. [1][3]

Labuan is a federal territory of Malaysia with its own offshore regime, the Labuan International Business and Financial Centre (IBFC), supervised by the Labuan Financial Services Authority (Labuan FSA). It is a real regulator with published guidelines, fee schedules and substance rules, which sets it apart from cheaper offshore options. The question for a prop firm is fit: Labuan's licences are written for brokers and exchanges, not for firms that sell evaluations.

This page covers what is specific to Labuan. For the launch order across platform, CRM, payments and website, start at [the start-a-prop-firm hub](https://pipvalley.com/start-a-prop-firm), and for crypto evaluations see [how to start a crypto prop firm](https://pipvalley.com/start-a-prop-firm/crypto).

> This page explains how things generally work and what Labuan FSA and advisers have published. It isn't legal, tax or financial advice. Confirm every point with a Malaysian lawyer, a Labuan trust company and a tax adviser before you act.

## What is a Labuan forex licence?

In Labuan the forex licence is a money-broking licence. The Labuan Financial Services and Securities Act 2010 defines money-broking business as "arranging transactions between buyers and sellers in the money or foreign exchange markets as an intermediary in consideration of brokerage fees", excluding buying or selling currencies as a principal. The current Guidelines on the Establishment of Money Broking Business, dated 9 September 2024, go further: the licensee may not act as a liquidity provider or market maker, "not permitted to speculate or engage in proprietary trading", and may not offer CFDs whose underlying assets are outside the money and FX markets.

The guideline also defines the audience. It is "intended to serve institutional investors and high-net worth individuals", caps leverage at 100:1 for FX, and Labuan FSA's FAQ of March 2025 says retail clients "should make up less than half of the portfolio". A separate Labuan securities licence, updated in June 2025, needs MYR 150,000 paid-up capital and professional indemnity cover of at least MYR 1,000,000, and its holder "is not allowed to hold clients' monies or assets".

## What is the Labuan digital asset licence?

There is no standalone "crypto exchange licence" in the 2024 money-broking guideline. Instead, a Labuan money broker can add digital assets: paragraph 6.2 covers bringing together counterparties "for the trading and exchanging of Digital Assets", provided the assets do not have the features of securities. That raises the annual fee to USD 10,000 and the paid-up capital to MYR 1,500,000, and caps digital asset leverage at 1:1. Labuan FSA's digital financial services page adds that "Labuan entities are required to obtain Labuan FSA's prior approval before undertaking proposed DFS-related activities", including digital asset exchanges and token activity.

The rules are tightening. Labuan FSA said on 1 September 2026 that it "introduced its regulatory framework for digital currency trading in 2024… followed by enhanced oversight of digital money broking platforms in 2025", and new Guidelines on the Management of Digital Money Broking Platform take effect on 1 January 2027. Separate guidelines cover security token offerings. Anyone searching "Labuan crypto license requirements" should read those documents with a Labuan adviser rather than rely on agent summaries.

**Labuan FSA fees and capital for broking licences (fee schedule from 1 Jan 2026; guideline of 9 Sep 2024)**

| Licence | Application | Annual fee | Paid-up capital |
|---|---|---|---|
| Money broker (conventional FX) | USD 500 | USD 5,000 | MYR 1,000,000 |
| Money broker with digital assets | USD 500 | USD 10,000 | MYR 1,500,000 |
| Securities licensee | USD 500 | USD 2,500 | MYR 150,000 |
| Fast-track processing (optional) | USD 1,500 | n/a | n/a |
| Labuan company (no licence) | n/a | USD 1,000 | Set by the company |

## Does a prop firm fit a Labuan licence?

Not naturally, on our reading of the guideline (Labuan FSA has said nothing about prop firms that we could find as of 12 October 2026). A prop firm sells evaluations to retail traders and pays rewards from simulated results; it does not arrange FX transactions between buyers and sellers for brokerage. A Labuan money broker, meanwhile, may not take positions, may not act as market maker and serves mainly institutional and high-net-worth clients. A firm that hedges or B-books funded traders' risk would struggle to do that inside a money-broking licence; see [what is a B-book prop firm](https://pipvalley.com/guides/what-is-a-b-book-prop-firm).

Where Labuan can fit is a group structure: a licensed broker in Labuan executing real trades for institutional clients, with the evaluation business run by a separate unlicensed company elsewhere, each with its own terms. That is a structure to design with a lawyer, not a shortcut. If you want an offshore licence that brokers commonly pair with prop programmes, compare [Mauritius](https://pipvalley.com/jurisdictions/mauritius) and [Seychelles](https://pipvalley.com/jurisdictions/seychelles); our [forex broker licence guide](https://pipvalley.com/guides/forex-broker-license) explains the differences.

## What substance does Labuan require?

Labuan's low tax depends on real presence. The Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2021 set minimum full-time employees in Labuan and annual operating expenditure there by activity, and require control and management in Labuan: board meetings "convened in Labuan at least once a year", a registered office, a resident secretary and records kept in Labuan. The money-broking guideline also expects an operational office in Labuan and, typically, at least three years' money-broking experience.

- Labuan money broker: 2 full-time employees and MYR 100,000 annual operating expenditure in Labuan.
- Labuan securities licensee: 2 full-time employees and MYR 100,000.
- Administrative, back-office and similar service companies: 2 employees and MYR 50,000.
- Pure investment holding (non-trading): 1 employee and MYR 20,000.
- Every Labuan company: a resident secretary who is an officer of a Labuan trust company.

## How is a Labuan company taxed?

Under the Labuan Business Activity Tax Act 1990, a Labuan entity carrying on a Labuan trading activity pays tax at three per cent on chargeable profits, which are "the net profits as reflected in the audited accounts". An entity that fails the substance regulations is taxed at 24% instead, and non-trading activity is not taxed under the Act. The old option to pay a flat MYR 20,000 instead of 3% was removed, generally from year of assessment 2020, according to ACCA. A Labuan entity can also elect irrevocably to be taxed under Malaysia's Income Tax Act 1967, and Malaysian residents' payments to Labuan companies face restricted deductions. Ask a Malaysian tax adviser how evaluation fees and trader rewards would be treated.

## Banking, payments and the Malaysian market

Labuan has its own banking sector: Labuan FSA says the centre "hosts over 50 banks offering a range of wholesale commercial and investment banking solutions", and broker capital must be deposited with a regulated bank in Labuan or Malaysia. Onshore Malaysia is a different matter. The LFSSA says the Exchange Control Act 1953 prevails where the two conflict, and Labuan FSA's FAQ requires brokers to observe Malaysian foreign exchange rules and obtain onshore approvals before dealing in ringgit or with residents. In other markets, Labuan FSA expects local approvals or a local legal opinion.

For card acceptance and payouts, expect the same high-risk treatment prop firms meet everywhere; see [prop firm payment processing fees](https://pipvalley.com/guides/prop-firm-payment-processing-fees), [crypto payments for prop firms](https://pipvalley.com/guides/prop-firm-crypto-payments) and [payout providers](https://pipvalley.com/guides/prop-firm-payout-providers).

## What must a Labuan firm's website show?

- Entity disclosure: Labuan company name, number and registered office, plus the licence type and number if you hold one.
- Accurate licence wording: a money-broking licence does not cover evaluations, and the website should not imply it does.
- A simulated-trading notice and rules page for any evaluation product; draft it with [the disclaimer generator](https://pipvalley.com/tools/prop-firm-disclaimer-generator).
- A restricted-countries list including Malaysia unless you hold onshore approvals; see [restricted countries](https://pipvalley.com/guides/prop-firm-sanctions-and-restricted-countries).
- Client categorisation (institutional, high-net-worth, retail) if you operate as a licensed broker.

> PipValley builds prop firm and broker websites with accurate licence disclosures, restricted-country logic and simulated-trading notices, on any platform. See [the launch service](https://pipvalley.com/services/launch-a-prop-firm).

## When should you not choose Labuan?

- If your business is a retail evaluation firm: the money-broking licence bars proprietary trading and targets institutional and high-net-worth clients.
- If you cannot fund substance: two staff, a Labuan office and MYR 100,000 a year are the floor for a broker.
- If you need a licence quickly: an adviser estimates four to six months.
- If you want to sell to Malaysians: onshore approvals come first. Compare [Dubai](https://pipvalley.com/jurisdictions/dubai), [Mauritius](https://pipvalley.com/jurisdictions/mauritius) and the [jurisdictions index](https://pipvalley.com/jurisdictions).

## Launch steps

1. **Decide what Labuan would hold:** Separate the evaluation business from any broking or digital asset activity and ask a lawyer which, if either, belongs in Labuan.
2. **Appoint a Labuan trust company:** Choose a Labuan trust company to act as resident secretary, run due diligence and file the incorporation.
3. **Plan capital and substance:** Budget MYR 1m–1.5m paid-up capital for a money broker, two full-time staff and MYR 100,000 a year in Labuan.
4. **Apply to Labuan FSA:** File the licence application (USD 500, optional USD 1,500 fast track) with your business plan; an adviser estimates four to six months.
5. **Get onshore and market approvals:** Obtain Malaysian approvals if you deal in ringgit or with residents, and approvals or legal opinions for other target markets.
6. **Set up banking and payments:** Open a Labuan or Malaysian bank account for capital and operations, plus card, crypto and payout routes.
7. **Publish accurate disclosures:** Launch a website with exact licence wording, client categorisation and restricted countries, reviewed by your lawyer.

## Providers worth a look

- **Confirmo**: Crypto payment gateway authorised as a CASP under MiCA, with a prop-trading page covering challenge payments and payouts.
- **NOWPayments**: Crypto payment gateway with mass payouts and a published prop-firm processor guide; fees from 1%.
- **CoinPayments**: Crypto payment gateway supporting 40+ cryptocurrencies with a 1% payment fee.
- **Sumsub**: KYC, AML screening and fraud prevention with a dedicated trading and broker solution.
- **Shufti**: KYC, KYB and AML screening with a free tier and published per-verification pricing.
- **B2PROP**: Prop platform, CRM, liquidity and crypto payments from one provider, for groups combining broker and prop activity.

## Your website

PipValley builds the marketing website for any platform or route: pricing table, rules, payouts, FAQ, legal pages and the checkout hand-off. Plan your launch: https://pipvalley.com/contact?src=launch-jurisdiction&place=labuan

## Questions

### What are the Labuan crypto licence requirements?

Digital asset broking is added to a Labuan money-broking licence: MYR 1,500,000 paid-up capital, at least two board members, an operational office in Labuan, two full-time staff and MYR 100,000 yearly spending there, 1:1 leverage on digital assets and Labuan FSA approval for digital activity. New digital platform guidelines apply from 1 January 2027.

### How much does a Labuan forex licence cost?

From 1 January 2026 Labuan FSA charges USD 500 to apply, plus an optional USD 1,500 fast-track fee, and USD 5,000 a year for a conventional money broker or USD 10,000 with digital assets. Paid-up capital of MYR 1 million or 1.5 million, staff, office, trust company and audit costs come on top.

### Can a prop firm be licensed in Labuan?

There is no Labuan licence for evaluation firms, and Labuan FSA has said nothing about prop firms that we found. The money-broking licence bars proprietary trading and market making and targets institutional and high-net-worth clients, so it fits a broker better than an evaluation business. Ask a Malaysian lawyer how a group structure could work.

### What is the tax rate for a Labuan company?

A Labuan entity with trading activity pays 3% of audited net profits under the Labuan Business Activity Tax Act, or 24% if it fails the substance regulations. Non-trading activity is not taxed under that Act. The old MYR 20,000 flat-tax option was removed from year of assessment 2020.

### How long does a Labuan money-broking licence take?

An adviser, Emerhub, estimates around four to six months to licence, and Labuan FSA offers a USD 1,500 fast-track processing fee. Incorporation through a Labuan trust company comes first, and capital must be deposited with a regulated bank in Labuan or Malaysia.

### Can a Labuan broker serve Malaysian clients?

Not without onshore approval. The LFSSA says the Exchange Control Act 1953 prevails where they conflict, and Labuan FSA's FAQ requires brokers to follow Malaysian foreign exchange rules and obtain approvals before dealing in ringgit or with residents. Most Labuan firms list Malaysia as restricted until they have that approval.

## Sources

1. [Labuan Financial Services and Securities Act 2010 (Act 704)](https://labuanfsa.gov.my/clients/asset_120A5FB8-61B6-45E8-93F0-3F79F86455C8/contentms/img/documents/Legislation_and_Guidelines/Legislation/Principal_Legislation/Labuan-Financial-Services-and-Securities-Act-2010-Act-704.pdf) (checked 2026-10-12)
2. [Labuan FSA: Guidelines on the Establishment of Money Broking Business in Labuan IBFC (9 Sep 2024)](https://www.labuanfsa.gov.my/clients/asset_120A5FB8-61B6-45E8-93F0-3F79F86455C8/contentms/img/documents/Legislation_and_Guidelines/Guidelines/Other_businesses/2024/Guidelines-on-the-Establishment-of-Money-Broking-Business-in-Labuan-IBFC_09092024.pdf) (checked 2026-10-12)
3. [Labuan FSA: FAQs on the money broking guidelines (24 Mar 2025)](https://www.labuanfsa.gov.my/clients/asset_120A5FB8-61B6-45E8-93F0-3F79F86455C8/contentms/img/documents/Legislation_and_Guidelines/Guidelines/Other_businesses/2025/FAQs_GLs-on-the-Establishment-of-MB-Business-in-Labuan-IBFC_24032025.pdf) (checked 2026-10-12)
4. [Labuan FSA: Guidelines on the Establishment of Labuan Securities Licensee (20 Jun 2025)](https://www.labuanfsa.gov.my/clients/asset_120A5FB8-61B6-45E8-93F0-3F79F86455C8/contentms/img/documents/Legislation_and_Guidelines/Guidelines/Capital_market/2025/Guidelines-on-the-Establishment-of-Labuan-Securities-Licensee.pdf) (checked 2026-10-12)
5. [Labuan FSA: FAQs on Guidelines on the Management of Digital Money Broking Platform (effective 1 Jan 2027)](https://www.labuanfsa.gov.my/regulations/guidelines/other-business/guidelines-on-the-management-of-digital-money-broking-platform-new-effective-1-january-2027/frequently-asked-questions-on-guidelines-on-the-management-of-digital-money-broking-platform) (checked 2026-10-12)
6. [Labuan FSA: Labuan FSA strengthens money broking rules amid evolving digital risks (1 Sep 2026)](https://www.labuanfsa.gov.my/resources/media/press-releases/labuan-fsa-strengthens-money-broking-rules-amid-evolving-digital-risks) (checked 2026-10-12)
7. [The Star: Labuan FSA tightens oversight of digital money broking activities (1 Sep 2026)](https://www.thestar.com.my/business/business-news/2026/09/01/labuan-fsa-tightens-oversight-of-digital-money-broking-activities) (checked 2026-10-12)
8. [Labuan FSA: Digital financial services](https://labuanfsa.gov.my/areas-of-business/financial-services/digital-financial-services) (checked 2026-10-12)
9. [Labuan FSA: Revised fees schedule (effective 1 Jan 2026)](https://www.labuanfsa.gov.my/areas-of-business/fee-schedule) (checked 2026-10-12)
10. [Labuan FSA: Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2021, P.U.(A) 423/2021](https://www.labuanfsa.gov.my/regulations/guidelines/tax-related-matters/circular-on-labuan-business-activity-tax-requirements-for-labuan-business-activity-regulations-2021-pu-a-423-2021-ote-substance/labuan-business-activity-tax-regulations-2021-pu-a-423-2021) (checked 2026-10-12)
11. [Labuan Business Activity Tax Act 1990 (Act 445), consolidated text (12 Dec 2022)](https://www.labuanfsa.gov.my/clients/asset_120A5FB8-61B6-45E8-93F0-3F79F86455C8/contentms/img/documents/Legislation_and_Guidelines/Legislation/2022/Draft%20ACT%20445%20BI%20update%202021%20-%20Website%20purpose%2012%20DEC%202022.pdf) (checked 2026-10-12)
12. [ACCA: Labuan, a comprehensive look](https://accaglobal.com/ie/en/student/exam-support-resources/professional-exams-study-resources/p6/technical-articles/labuan---a-comprehensive-look.html) (checked 2026-10-12)
13. [PwC Worldwide Tax Summaries: Malaysia, income determination](https://taxsummaries.pwc.com/malaysia/corporate/income-determination) (checked 2026-10-12)
14. [Labuan Companies Act 1990 (Act 441), updated 23 Aug 2022](https://www.labuanfsa.gov.my/clients/asset_120A5FB8-61B6-45E8-93F0-3F79F86455C8/contentms/img/documents/Legislation_and_Guidelines/Legislation/2022/Act%20441%20-%20Labuan%20Companies%20Act%201990%20-%20Updated%20Version_23082022.pdf) (checked 2026-10-12)
15. [Labuan FSA: Banking](https://labuanfsa.gov.my/areas-of-business/financial-services/banking) (checked 2026-10-12)
16. [Emerhub: Labuan forex money broker licence (updated 29 Apr 2025)](https://emerhub.com/malaysia/labuan-forex-money-broker-license/) (checked 2026-10-12)

_Not legal, tax or financial advice: rules differ by place and change often; speak to a qualified lawyer and tax adviser. Evaluation accounts are simulated; nothing here promises revenue, pass rates or payouts._