Bank Negara, the central bank of Malaysia, has reiterated its stance against cryptoassets – as it has again made it clear that these are not considered legal tender in the country.
Central Bank Says Cryptos Are Too Risky
Moreover, Malaysia’s reserve financial institution has issued a warning to the nation’s investors regarding the potential scams (or fraudulent schemes) associated with cryptocurrency related firms.
Other risk factors identified by the bank were the highly speculative and volatile nature of digital assets. This is something that other nation’s regulators have also said, while recommending such investments for those who have the financial resources to absorb huge potential losses from trading or investing in this new asset class.
Working With Securities Commission To Draft Regulations
As reported by the Star Online, Bank Negara will be working closely with the Malaysian Securities Commission to formulate a regulatory framework for digital assets. The new guidelines will aim to ensure that local businesses are complying with appropriate laws and regulations – including standard know-your-customer (KYC) and anti-money laundering (AML) checks.
The reserve bank and the SC issued a joint statement noting:
“SC will regulate issuances of digital assets via initial coin offerings (ICO) and the trading of digital assets at digital asset exchanges in Malaysia. Regulations are currently being put in place to bring digital assets within the remit of securities laws to promote fair and orderly trading and ensure investor protection”
More Progressive Regulations In Nearby Countries
Interestingly, nearby jurisdictions such as Thailand appear to have adopted a more progressive approach towards regulating cryptocurrencies. In fact, the Thai Securities and Exchange Commission (SEC) legalized seven major cryptoassets for initial coin offerings (ICOs) in June 2018. They include bitcoin (BTC), bitcoin cash (BCH), ethereum (ETH), ethereum classic (ETC), litecoin (LTC), stellar (XLM), and XRP.
Banks in Thailand may also start their own crypto-related business and one of the few requirements for this is to conduct such operations by establishing a subsidiary. Digital asset exchanges may also provide services to Thailand’s residents – after satisfying appropriate regulatory requirements.
Varied Responses To Cryptocurrencies
Other countries in Asia such as China, Indonesia, the Philippines, Singapore, South Korea, and North Korea have had varied responses/approaches to digital currencies and their underlying blockchain technology.
Recently, South Korea’s regulatory authorities announced that they will begin to tax ICO projects. The country’s finance minister nominee, Hong Nam-ki, said that a working group “consisting of experts from relevant government agencies including the National Tax Service and the private sector” will be established – in order to study crypto taxation systems adopted or proposed in other nations.
Presumably, the end goal of this effort will be to develop an effective system that will allow the South Korean government to tax cryptocurrency related companies. However, filing taxes and holding people accountable to pay taxes on their crypto earnings is currently quite challenging – which is something we may discuss here on CryptoCoreMedia in a future post.