A news report today by news outlet The Star Online has revealed that digital asset trading in Malaysia will now be recognized as a market on equal footing with equity crowdfunding (ECF) and peer-to-peer financing (P2P).
According to the post, the Malaysian financial regulator, Securities Commission (SC), made the announcement earlier today in a briefing with the press when it highlighted the amendments made to its Guidelines on Recognized Markets.
The amendment was aimed at protecting investors and digital asset operators while making the nation inclusive of cryptocurrency trading. Chairman of the SC Syed Zaid made this clear when he said: “The new framework is part of the SC’ efforts to promote innovation while ensuring investors protection.”
However, Syed made it clear that this was a one-part measure to protecting investors, noting that investors would have to take on the responsibility of additional safeguards with respect to making investment choices, knowing that enterprise is still growing and has many risks involved, citing volatility and liquidity issues.
Further, with respect to current and prospective digital assets operators such as exchanges, a formal registration with the SC is required for recognition as market operators. More so, the regulator has stated that under the amended Guideline, “operators must be a locally-incorporated company with a minimum paid-up capital of MYR 5 million [about USD 1.22 million] upon commencing requirements”. This is subject to change by the regulator on a case-by-case, basis the report reads. Registration with the SC will commence on 1 March.
Digital asset operators in Malaysia have been tasked with the duties of ensuring the safety of their investors’ funds by maintaining real-time activity logs of their clients as well as having anti-theft systems in place.
As for operators of initial coin offerings, a separate guideline will be released by the end of March for further clarity
Malaysia has been working steadily on regulating the industry, though at some point, the regulatory stance became rather unclear. This had been a very sensitive area for the government, especially with cryptocurrency, which continues to prove to be valuable digital innovation and yet possesses huge financial security risks.
However, with the amended framework, and the newly enforced legislature dubbed the Capital Markets and Services Order 2019 in place, the Southeast Asian country can be classed with those who are forward thinking with regards to blockchain and the underlying emerging asset classes.
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