Business 7 November 2017

Ed Drake

Malaysian securities regulator reviewing fresh cryptocurrency laws

The Malaysian securities regulator has become the latest market regulator to move towards a new legal framework for cryptocurrencies.

The news comes with the announcement this week from the Securities Commission Malaysia, disclosing advanced preparations for fresh “regulations and guidelines” in a number of recognised use cases for cryptocurrencies and other digital assets.

In close partnership with Bank Negara Malaysia, the Malaysian central bank, the regulatory provisions could also include guidelines for a ‘secondary market’ in crypto assets, a crucial step to giving legal legitimacy to cryptocurrency exchange transactions.

According to Securities Commission Malaysia chairman Tan Sri Ranjit Ajit Singh, the regulator expects to finalise proposals over the coming months, paving the way for new legislation.

“Together with BNM, we will look at the area carefully and as SC is in charge of the secondary market, we would craft regulations to ensure that the trading values have the right conditions in place for market integrity and investor projection purposes”.

He continued by explaining that a number of cryptocurrency exchanges had already come forward with proposals to offer exchange in the Malaysian market, and registration would be subject to the finalisation of the new legal structure.

Beyond their work in developing laws in this area, Singh also pointed to the Commission’s efforts to introduce distributed ledger technology for processing OTC and unlisted securities transactions.

The proposals were suggested at the SCxSC Digital Finance Conference, an event held in Kuala Lumpur this week, as part of talks to introduce further innovation through new technologies in Malaysia’s capital markets.

The developments come at a time of increasing activity amongst securities regulators worldwide, faced with responding to the challenges of these new emerging technologies and markets.

Representing a departure from their previously more cautious approach, Malaysian authorities had suggested last month that moves to ban cryptocurrencies could be brought forward as early as the end of 2017.

The proposals are not yet confirmed, but are expected to be fully detailed over the course of the next few months. While there remains some uncertainty over the long-term position, the move will bring clarity at a time when regulators around the world are testing alternative approaches to these issues.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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