Malaysia’s Securities Commission (SC) will have powers to regulate digital asset offerings and crypto exchanges as of Tuesday, 15th January.
The SC’s notice says that the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 will come into force today.
The order means that “token offerings and exchanges would require approval from the SC before starting operations and would have to comply with securities laws in the country,” Coindesk writes.
In the statement, Finance Minister Lim Guan Eng said, “Any person offering an ICO or operating a digital asset exchange without SC’s approval may be punished, on conviction, with imprisonment not exceeding 10 years and fine not exceeding 10 million Malaysian ringgits [$2.44 million].”
The SC also explained that “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.”
It also means that any entity dealing in crypto assets must comply with anti-money laundering and counter-terrorism financing (AML / CFT) rules, as well as “cyber security and business continuity measures.”
Malaysia’s The Star newspaper also quoted Lim as saying: “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.” The SC and the Bank Negara Malaysia have both explained that the new regulations are aimed at bringing digital assets “within the remit of securities laws to promote fair and orderly trading and ensure investor protection.”
However, whilst there is now some certaintyl over the status of ICO tokens, there is still uncertainty over the status of cryptocurrencies in Malaysia. Khalid Abdul Samad, the country’s territories minister, told the New Straits Times, “People have asked me if [cryptocurrency and digital currency] are legal or illegal. At the moment, the answer is neither legal nor illegal as the situation is still unclear.”