Malaysian authorities will have powers to regulate ICOs and crypto exchanges from today, following an announcement by the Ministry of Finance that laid out new crypto regulations. The Securities Commission Malaysia (SC) has been granted the powers under the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019, although cryptocurrencies themselves are still in a regulatory gray area with regard to their legality. The decision comes eight months after cryptocurrency was suddenly thrust into the spotlight after it featured in the 2018 General Election, the ramifications of which are still being felt today.
Finance Minister Bullish on Crypto and Blockchain
The SC’s order, which was announced on Monday, is in line with regulations being introduced around the world in order to curb the illegal use of cryptocurrencies, and which more countries are set to introduce:
The guidelines will among others, establish criteria for determining fit and properness of issuers and exchange operators, disclosure standards and best practices in price discovery, trading rules and client asset protection. Those dealing in digital assets will be required to put in place anti-money laundering and counter-terrorism financing (AML / CFT) rules, cyber security and business continuity measures.
This framework will be in place by the end of the year, but the law will be enacted on Tuesday, with heavy punishments in place for those who contravene it – a 10-year jail and RM10 million fine. In the announcement however, Finance Minister Lim Guan Eng was broadly positive of the potential for blockchain and cryptocurrencies, adding Malaysia to the list of countries who welcome the new technology:
The Ministry of Finance views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries. In particular, we believe digital assets have a role to play as an alternative fundraising avenue for entrepreneurs and new businesses, and an alternate asset class for investors.
Malaysia’s Strange Relationship with Crypto
Malaysia’s relationship with cryptocurrency has been an interesting one, after the shock 2018 General Election victory of the opposition party was partly financed via the Harapan Coin project, a cryptocurrency set up purely to finance the opposition campaign. Conversations are still ongoing as to whether the cryptocurrency will become the country’s national currency, and even whether cryptocurrencies are legal at all in the country, a decision which still remains in the balance.