Malaysia is going to be a well-regulated crypto market soon.
Due to the uncertainty that has arisen with regard to cryptocurrency in the past few weeks, the Malaysian Securities Commission has clarified on certain positions it holds regarding digital assets.
Last month has been a ‘no picnic’ season for Malaysian crypto-exchanges, with the possibility of RM10 mn fine and 10 years prison looming over ever since the Capital Markets and Services Order 2019 was announced by Finance Minister Lim Guan Eng.
Fortunately, the ambiguity has been lifted off the air with Securities Commission Malaysia (SC) declaring its much-anticipated framework for crypto-exchanges and digital assets.
The current framework will come under the purview of SC’s guidelines on recognised markets, which is the same that is employed to regulate equity crowdfunding and P2P lending members. Under the same guideline, the regulator has amended a section to include new obligations for crypto exchanges.
One of the significant revelations is that the Securities Commission refutes is the blanket consideration of crypto-assets as securities.
Digital Assets Considered Securities
As per the directions provided by the Federal Gazette website, a digital asset is said to be a security when:
For crypto tokens which embodies the rights or interests of a person in a particular order where:
New Guidelines and Requirements for Crypto Exchanges to Operate in Malaysia.
The improved guidelines are classifying crypto exchanges as a Digital Asset Exchange Operator. In brief, the following are some requirements that crypto exchanges need to comply with, in order to function in Malaysia.
The following are some of the essences of the guideline. For a more precise read, it would be better to visit the Securities Commission Malaysia’s website.
Under the updated guidelines, anybody who is interested in running a digital asset platform is required to apply to the SC, to be registered as a verified market operator by 1 March 2019.
Commenting on the updated guideline Datuk Syed Zaid Albar, SC Chairman stated that the current framework and guidelines are part of SC’s attempt to support innovations while ensuring investor protection in trading of digital assets. Also, he added that even though the framework is to aid the investors they are suggested to be mindful of the risks such as unexpected volatility and liquidity risks when dealing with digital assets.
Meanwhile, the industry leaders and government official are going to gather at World Blockchain Summit in Kuala Lumpur to shed lights on the Malaysian economy for active legislation for blockchain based service providers and guidelines for ICOs.