In 2018, Malaysia updated the legislative framework, adopting regulations for cryptocurrency regulation. According to them, exchanges, exchangers, and organizations that convert non-fiat funds are equated to “reporting agents”. Control over the sphere is given to the state’s central bank (Bank Negara Malaysia) and the Securities Commission’s primary regulator. It should regulate relations within the framework of the ICO and issue licenses for the exchange of cryptocurrencies in Malaysia.
Despite legislative progress and the efforts of the Malaysian authorities to combat fraud, there is no developed mechanism for verifying and determining the legal status of cryptocurrencies in the country. According to the Central Bank, regulation of the sphere will be carried out within the framework of anti-money laundering and terrorist financing policies. It is necessary to develop internal procedures regarding the conduct of transactions, implement technical and organizational measures to combat money laundering and terrorist financing, identify customers, store transaction data, train employees, and perform some other mandatory actions.
The Malaysian government considers issuing licenses for cryptocurrency and the legal status of non-fiat funds, but the exchange of electronic money is self-regulated. Issuers are free to set their own rules, ensuring that tokens comply with the Capital Markets Act of 2007 and are subject to securities laws. Now the Malaysian Bank Negara is developing regulations that determine the direction of development of non-fiat funds in the country. Judging by the statements already made public, they are promising, and obtaining a license to exchange cryptocurrencies in Malaysia can be beneficial for businesses.
Malaysian Licensing and Cryptocurrency Regulation
All issues related to the circulation of non-fiat funds are under the jurisdiction of the Central Bank Commission, and a license for cryptocurrency will be issued depending on the compliance of the exchanger with the rules of the regulator. He is endowed with a wide range of powers to control exchanges and ICOs and may announce the termination of the organization’s activities due to non-compliance with standards. To legally operate in Malaysia, an exchanger must:
- submit investment documentation for approval to Bank Negara;
- fulfill the conditions under the regime for disclosing information about participants in transactions;
- provide evidence of sufficient protection of investor funds, compliance with AML rules, and countering international terrorism;
- confirm that the exchange can do diligence on its customers, collect data about them, their activities, etc.
The Prifinance company will help develop a cryptocurrency business that meets the current Malaysian standards and international requirements. Experts will provide organizational and legal support, complete a corporate and tax model and prepare the necessary documentation for submission to the regulator.