Malaysia’s central bank, Bank Negara Malaysia (BNM) and its Securities Commission (SC) have recently released a joint statement saying that they will be collaborating in implementing a regulatory framework for digital currencies and initial coin offerings (ICOs) in the country. In a joint statement, the two organizations clarified that the collaborations will be restricted to only ensuring compliance with laws and regulations that fall under the oversight authority of the financial regulator and the central bank – no more, no less.
“In order to implement the regulatory framework on digital assets, the SC and BNM will enter into coordination arrangements to ensure compliance with laws and regulations under the purview of both regulators,” said the joint media release.
The statement further pointed out that the said regulations are currently being put in place and the main intention is to bring digital assets such as cryptocurrencies within the remit of securities laws so as to promote fair and orderly trading while at the same time promoting investor protection.
What It Means for ICOs and Crypto Startups
From here on out, the Securities Commission will be regulating Initial Coin offerings as well as digital currency trading in the country. At the moment, relevant legislative measures are being worked on – these will require that cryptocurrency exchanges and initial coin offering issuers dealing with digital currencies to fully comply with the central bank’s laws and regulations. In addition to this, the issuers of ICOs and the exchanges will also need to comply with the Securities Commission’s ‘Guidelines on Prevention of Money Laundering and Terrorism Financing’.
Malaysia has always been considered to be a pro-digital currency nation but the joint statement shifted this notion. According to the central bank, digital assets are not a legal tender in the country. This joint statement comes barely a week after Lim Guan Eng, Malaysia’s finance minister, stated that crypto-regulations would be introduced within the first quarter of 2019 to ensure that the interests of investors are protected. A month ago, the finance minister also said that only the central bank has the authority to decide on whether or not any party can issue cryptocurrencies.
As much as they may seem to be quite strict, the finance minister’s directives have the potential to significantly boost the adoption of digital currencies in the country especially now that it has been confirmed that regulations are on the way. The regulatory framework is a key component of the government’s plans to spur the growth of alternative financing for enterprises, one of the government’s key focuses as it seeks to encourage growth in the private sector while at the same time reducing the government’s fiscal burdens.
Furthermore, for a financial environment where the conventional funding sources are susceptible to a number of setbacks, crypto-powered alternative financing solutions could play a huge role in the development of Malaysia’s budding knowledge economy.