Back in October 2017, Bank Negara Malaysia (BNM) revealed it would announce regulations covering digital currencies before the end of 2017. The announcement was shrouded in uncertainty, as many expected the country to ban cryptocurrencies. Now, Malaysian deputy finance minister, Datuk Seri Johari Abdul Ghani, confirmed the country won’t ban cryptocurrencies , and clarified regulations are still being considered.
In an interview with The Malaysian Reserve, the official said banning cryptocurrencies like bitcoin will only curb innovation and creativity in the financial sector, especially when it comes to fintech,.
Reportedly the government’s goal is to strike a balance between the financial system’s integrity and the public’s interest. He added:
“It is not the intention of the authorities to ban or put a stop on any innovation that is perceived to be beneficial to the public. However, similar to any financial and investment schemes, there is a need to have proper regulation and supervision to ensure any risk associated with such schemes are effectively contained.”
While open to cryptocurrencies in the country, Johari said the country’s central bank BNM, is taking a cautious approach. As such, it will ensure cryptocurrency exchanges comply with regulations, so as to inform authorities of suspicious transactions and comply with know your customer (KYC) requirements.
Johari further stressed that innovation in the financial sector “will not only enhance productivity of economic activities but also make financial intermediation more seamless”. As such, the official sees cryptocurrencies and e-wallets as essential in Malaysia’s digitalization roadmap.
Understand Cryptocurrencies vs Ban Cryptocurrencies
To the country’s deputy finance minister, it is of utmost importance to have a thorough understanding of how digital currencies work before introducing regulatory policies. Per his words, this is particularly relevant with innovations like bitcoin, which aren’t yet “battle-tested against shocks, unlike more conventional mediums of exchange.”
Once Malaysia regulates cryptocurrencies, Johari conceded the central bank may then recognize regulated cryptocurrency exchanges. Malaysia’s cryptocurrency clarification comes at a time in which bitcoin starts to recover from a $12,500 30-day low to $14,900 at press time, partly thanks to Peter Thiel’s Founders Fund.
The cryptocurrency ecosystem’s developments and its unregulated nature forced regulators and governments to spring into action. Their need to protect investors and prevent cryptocurrency usage in illegal activities has often led them towards a cryptocurrency ban. As reported by Core Media, in late October the State Bank of Vietnam also proposed banning bitcoin.