Cryptographic service providers must obtain authorization from the Security Commission. Investors are interested in cryptoactives to be considered legal

Malaysian Finance Minister, Lim Guan Eng, reported on Monday that his country “will regulate the initial offers of cryptocurrencies (ICOs) and the cryptocurrency trade”.

The mandate is called “Order of Capital Markets and Services 2019”. Cryptographic service providers and exchanges must obtain prior authorization from the regulatory entity, while the Central Bank (Bank Negara) will guarantee compliance with the measures. These assets must comply with the relevant securities laws and be approved by the Commission, the minister explained.

In order to make it possible, on January 15th an order came into force to recognize digital currencies and tokens as securities, under the regulation of the Securities Commission Malaysia. It is expected that the relevant regulatory framework will be launched by the end of the first quarter of 2019.

The Malaysian regulator noted that: “The guidelines will establish criteria to determine the adjustment and ownership of issuers and exchange operators, disclosure standards and best practices in price discovery, business rules, and client’s asset protection. Those who operate digital assets must implement anti-money laundering and anti-terrorism financing, cybersecurity and business continuity measures”.

Similarly, Lim Guan Eng said he sees potential in blockchain technology and digital assets, which he defined as great alternative values ​​for the Asian country. “Digital assets, as well as the underlying technologies of blockchain, have the potential to generate innovation in both old and new industries (…) In particular, we believe that digital assets have a role to play as an alternative route fundraising for entrepreneurs and startups, and for an alternative asset class for investors”, he said.

Clearing Doubts

Only a few days ago, the Malaysian government was not sure if it would legalize cryptocurrencies, even though on previous occasions it had pointed out that operations with these digital assets are not illegal either. The launch of Harapan Coin (HRP), a government cryptocurrency proposal for government transactions, was also being prepared.

In December, the Malaysian financial regulator and the Central Bank issued a statement confirming that “The Malaysia’s Securities Commission will regulate the issuance of digital assets through Initial Coin Offerings (ICOs) and the trading of digital assets in exchange houses in Malaysia. The regulations are in the development stage to take digital assets towards compliance with securities laws and promote fair trading and ensure the protection of investors”.

Last October, during a conference about cybersecurity, Judge Paul Grimm, who is part of the United States District Court for the District of Maryland, urged Malaysian investors to be meticulous and prudent when investing in crypto-nominations.

The US judge did not show rejection towards cryptoactives, but recommended caution and “diligence” when investing in them. “If you are considering cryptocurrencies as an investment, you should be diligent about how the currency is valued, the fluctuations in value and how to deal with the risks associated with the investment”, said Grimm.

It should be noted that Judge Grimm’s comments come after the Central Bank of Malaysia, Bank Negara Malaysia, declared, in March 2018, that cryptocurrencies were not legal tender in the country, even though the Malaysian government ordered the cessation of all promotional activities related to the Lavidacoin cryptocurrency (LVC) and Coinzer’s ICO, for allegedly using the logo of the country’s central bank.

In the middle of this situation full of changes, retail investors in Malaysia show desires to acquire cryptocurrencies, in order to conduct their transactions comfortably.

By María Rodríguez


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