Malaysia regulator plans framework for wallet providers

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The Malaysian securities regulator is looking to formulate and implement a legal framework for digital currency wallet providers. The regulator has started seeking feedback from industry stakeholders before it settles on its final draft.

In its press release, the Securities Commission of Malaysia (SC) said that the industry feedback would “complement the existing frameworks for Digital Asset Exchange (DAX) and Initial Exchange Offering (IEO).”

The SC acknowledged the great role that wallet providers play in the digital assets industry. These companies safeguard the digital assets of the clients, enabling them to easily manage, trade, send and receive the assets.

The watchdog called on the digital asset wallet providers in Malaysia, or any other interested party, to reach out for an engagement on their current business operations or provide feedback on the upcoming framework. The deadline for this consultation period is August 14.

Once finalized, the wallet providers’ framework will become part of the country’s “Guidelines on Digital Assets.” These guidelines lay down all the rights and requirements of digital assets users and issuers in the Southeast Asian country.

The guidelines dictate that for a company to issue a token offering in Malaysia, it must be incorporated in Malaysia. A token offering must only be done via an IEO platform, with the issuing company being required to have at least two directors based in the country.

The guidelines also delve into the requirements for IEO operators which include a minimum capital of $1.1 million, sufficient AML and KYC programs, be incorporated in Malaysia and have at least two locally-based directors.

The SC has been tough on digital currency companies as it seeks to protect the local investors. In its most recent action, it added Binance to its list of unauthorized service providers. It claimed that the digital currency exchange has been operating without seeking its authorization. The SC warned against investing in the exchange, which has previously been banned in Malta and partially in Brazil.

Malaysia has been pro-digital currency, with the Prime Minister calling on Muslim nations to unite and develop a digital currency that can help them overcome sanctions by the United States. PM Mahathir Mohamad joined Iran and Turkey in calling for the Muslim digital currency.