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15 New Crypto Regulations Enacted in Malaysia but Government Appears Overall Positive

Malaysia

According to a media report, 15 new regulations concerning the crypto sector came into effect in Malaysia on 15 January. After the implementation of these new regulations, the country’s crypto sector may have to go through tough legalization processes. However, strict regulations are expected to attract more investors as it will lead to improved security.

As reported by the media, from now on, cryptocurrencies, tokens and crypto assets will be classified as securities. These securities will be under the jurisdiction of the Malaysian Securities Commission.

The new regulations state that a 10-year jail sentence and fines (up to USD 2.4 million) will be imposed on any unauthorized cryptocurrency exchanges or initial coin offering. Although some people are calling it a very harsh act, others seem to be satisfied as it will bring more transparency.

It may seem like the Malaysian government has taken a hard line regarding the crypto sector but the media reports claim that there are positive sentiments in the government regarding cryptocurrencies and blockchain technology.

Lim Guan Eng, Finance Minister, expressed his views saying that the government is well aware of the potential of the crypto sector and is looking to take advantage of it in order to improve the economic condition. He added that the government believes innovation can be brought into both old and new industries by utilizing blockchain technology. Digital assets can become an alternative asset for investors as well as for entrepreneurs and new businesses.

In the previous weeks, there were ambiguities regarding the Malaysian government’s stance on cryptocurrencies. However, the finance minister’s recent address has cleared the situation.

It is important to note that the Malaysian government has a high level of awareness regarding the crypto sector. Previously, the central bank decided to set up a cryptocurrency unit along with a fintech sandbox. Apparently, the recent regulations are aimed at bringing more transparency to the sector in order to increase the trust level of investors. The move will likely turn out to be a beneficial one for the crypto sector.

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New Malaysian Legislation Starts Today, Illegal ICOs Face $2.5 Million Fine

Malaysian

While Malaysia has been contemplating cryptocurrency legislation for some time, latest news emerging from the South East Asian country reveals that the government may designate tokens and digital assets as securities and bring them under the jurisdiction of Malaysian Securities Commission. As part of the new legislation, any person offering illegal and unregistered initial coin offerings and other token projects will also be penalized with a reported jail sentence of up to 10 years and MYR 10 million (USD 2.45 million) fine.

According to a Reuters report, the new legislation called The Capital Markets and Services Order 2019 will bring tokenized assets under the control of the central securities commission of the country. According to Finance Minister Lim Guan Eng, the new legislation will be effective from 15 January onwards.

While the new regulations seem to be harsh, Malaysian News outlet The Star highlighted the positives in the new move: “The Ministry of Finance views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries.”

While Lim believes that ICOs and tokens will provide a valuable alternative for raising capital and other officials have also welcomed the sector, the new regulations are tough. The Malaysian blockchain industry has boomed in recent years because of loose regulations but, with stricter authority in the hands of the Securities Commission, the future remains uncertain for the sector.

 

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Malaysia: Government Still Undecided About Cryptocurrency

Malaysia: Government Still Undecided About Cryptocurrency

The Federal Territory Minister in Malaysia Khalid Abdul Samad has said that the current status of cryptocurrency in the country is undecided. He made the comment during a charity event organized by Pertubuhan Kebajikan Insaniah Srikandi Malaysia.

In the comment, he said: “At the moment, the answer is neither legal nor illegal as the situation is unclear.” This was in response to a question about the legal status of cryptocurrency.

Samad was involved in the development and launch of the controversial Harapan Coin – a project dubbed the ‘world’s first crypto-politic ICO’ – said to be a platform that will revolutionize Malaysian politics. He disclosed that he was not appointed as finance minister, but the federal territory minister, which made crypto regulations hardly a subject particular to his jurisdiction. “As the matter is not under my jurisdiction, I cannot push too much,” he said.

However, Samad reportedly proposed the adoption of Harapan Coin to Malaysia’s Central Bank, the Bank Negara Malaysia (BNM) and Prime Minister Tun Dr. Mahathir Mohamad. However, questions have been raised about the functional and clarity of purpose of the Harapan Coin by a select few, including former Prime Minister Datuk Seri Najib Razak.

In November last year, the finance minister of Malaysia Lim Guan Eng confirmed that a digital asset regulatory framework is scheduled to be released in the first quarter of 2019. This regulatory framework, which has been in motion for over a year now was intended to help the cryptocurrency industry without compromising on their financial system.

The report in November further suggested that the regulatory framework will most certainly include standards for both cryptocurrency exchanges and initial coin offering (ICO).

For now, any project that intends to issue cryptocurrency in Malaysia would have to go through the country’s central bank, Bank Negara Malaysia (BNM). More so, cryptocurrency exchanges have been reporting their data to the bank in order to forge a system to watch for money laundering activities. However, the Bank has stated explicitly that this in no way provides a certification of services by the exchange.

So far, the development of the industry has leaned more to the blockchain scope and while the regulatory stance of the financial watchdog is still underway, blockchain use cases are still spreading, this includes the recently developed remittance system and the proposed blockchain-based degree verification system.

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Goldman Sachs Faces Criminal Charges in Malaysia, Calls for Blockchain Transparency

1MDB

Criminal charges were filed this week against leading investment bank Goldman Sachs by Malaysia’s Attorney General as part of ongoing investigations into Malaysia’s highly-controversial USD 2.7 billion 1MDB development fund scandal.

The charges were filed under Malaysia’s security laws against the NY banking giant and its former bankers Tim Leissner and Roger Ng, former 1MDB employee Jasmine Loo and financier Jho Low in connection with the bond offerings.

The Wall Street Journal cites that a statement confirmed that the bank omitted material information and published untrue statements with the prosecution claiming that out of USD 6.5 billion worth of bonds arranged by Goldman Sachs, USD 2.7 billion were embezzled, creating a USD 600 million profit for Sachs. Malaysia’s Attorney General Tommy Thomas stated:

“The charges arise from the commission and abetment of false or misleading statements by all the accused in order to dishonestly misappropriate USD 2.7 billion from the proceeds of three bonds issued by the subsidiaries of 1MDB, which were arranged and underwritten by Goldman Sachs.”

A Sachs spokesman responded that the charges were misdirected and the bank would cooperate with the investigation. If convicted those involved could face up to ten years imprisonment under Malaysian law and face fines well in excess of the allegedly misappropriated funds.

Speaking of the bank’s credibility following the accusations, Attorney General Thomas said that, “Having held themselves out as the pre-eminent global adviser/arranger for bonds, the highest standards are expected of Goldman Sachs. They have fallen short of any standard.”

In a statement quoted by the Wall Street Journal, Goldman Sachs said:

“At a time when some are calling for aggressive regulation of cryptocurrencies, this case illustrates the potential that exists for blockchain technology and cryptocurrency systems to create a positive disruption within the existing banking paradigm which permits or even encourages theft and inefficiency through opaque processes and practices.”

These unexpected views from the bank although numerous reports this year have suggested that Goldman Sachs is considering offering crypto custodial services for clients. The bank has hinted recently that they would be expanding on its crypto trading desk to develop a bitcoin derivative known as a “non-deliverable forward” due to demand from clients. The Sachs statement quoted by the Wall St Journal continued:

“The complete transparency offered by cryptocurrencies makes it very unlikely that a single sticky-fingered public official would realistically get away with diverting the better part of a billion dollars, aided and abetted by private bankers whose only real interest is in their fees – USD 600 million in this case.”

 

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Securities Commission, Central Bank of Malaysia Declare Regulatory Intentions for Crypto

Securities Commission, Central Bank of Malaysia Declare Regulatory Intentions for Crypto

The securities commission and central bank of Malaysia have released a joint press release offering a brief outline of their intentions to regulate digital assets and initial coin offerings (ICOs).

The announcement, co-authored by the Securities Commission Malaysia (SC) and the central bank of Malaysia, Bank Negara Malaysia (BNM), aimed to provide some clarification on the regulations being put in place. The news comes shortly after the Finance Minister of Malaysia, Lim Guan Eng, had told local press that the digital asset regulatory framework would be delivered in the first quarter of 2019.

In brief

Currently, the regulations to “bring digital assets within the remit of the securities laws to promote fair and orderly trading” are to be applied to digital assets issued through ICOs as well as the trading of cryptocurrencies on domestic exchanges, to “ensure investor protection”. It extends this by adding that ICO issuers and exchanges will be subject to the commission’s ‘Guidelines on Prevention of Money Laundering and Terrorism Financing’.

Accordingly, both ICO operators and crypto exchanges that handle digital assets with “a payment function” will be required to adhere to BNM laws and regulations pertaining to payments and currency matters. Previously, Lim had spoken open-mindedly about cryptocurrencies, claiming that he did not want to hinder cryptocurrencies, though reminded that they are subject to existing laws.

The press release concludes with a disclaimer from the BNM stating that “digital assets are not legal tender in Malaysia”, encouraging consumers to perform due diligence prior to engaging with cryptocurrencies. Finally, it loosely describes how these frameworks are to be implemented, writing, “…the SC and BNM will enter into coordination arrangements to ensure compliance with laws and regulations under the purview of both regulators”.

Regional competition

Malaysia has been emerging as a key player in the South East Asia blockchain race that is accelerating in pace. In September, the nation displayed its bullish moves and began working to marry its top three industries with blockchain technology, namely Islamic banking, palm oil, and its energy sector.

The region has undoubtedly caught the blockchain buzz. In the Philippines, ICOs and cryptocurrency exchanges are soon to have regulations in place, which comes shortly after two new crypto exchanges were established and additional bullish blockchain news.

In addition, Singapore has been making waves akin to that of nations who, like South Korea, are feverishly adopting blockchain technologies, bolstering the domestic ecosystem through institutional investors and making significant progress in their bid to regulate the sector.

As competition heats up in the region, many other major entities such as the European Union and the G20 are making strides in a similar direction. Blockchain is breaking out into global discourse like never before; the “fad” is here to stay.

 

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Malaysia to Release Crypto Regulations in Q1 2019

In a local news report, Finance Minister of Malaysia Lim Guan Eng confirmed today that a digital asset regulatory framework that will include cryptocurrency exchanges and initial coin offerings (ICO) will be released and enforced during the first quarter of 2019.

Over a year ago, the Malaysia central bank began the development of a pro-blockchain and underlying asset regulatory framework to facilitate the development of the digital asset industry in the country without compromising its own financial system.

This effort was further clarified in a previous interview where Lim said, “It is not that we wish to obstruct (cryptocurrency) as we are keeping an open mind. But it is still subject to existing laws.” He added that any party wanting to include cryptocurrency would have to first refer to the central bank, Bank Negara Malaysia.

According to Lim, the interest of investors is a priority and needs safeguarding, saying, “While some parties might still be skeptical of this space, there can be no doubt that we need appropriate regulations to be put in place and enforced to safeguard the interest of investors.” He further hinted that the regulation is part of the Securities Commission’s efforts towards promoting the ideas of the new funding options for businesses and the rise of the new investment digital asset classes.

Further, while keeping an open mind is the current stance of the parliament towards these digital enterprises, the government is also breaking grounds through co-investment fund in alternative financing such as equity crowdfunding (ECF) and peer-to-peer financing (P2P) platforms.

“We are keen on the continued development of such alternative financing avenues for these businesses beyond the traditional channels of financing,” he said.

So far, recent blockchain developments in Malaysia include its education sector considering blockchain solution in combating degree fraud. However, it seems the case of Harapan Coin, a project speculated to become a Malaysian centrally-banked cryptocurrency, has yet to garner significant support.

 

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Malaysian Crypto Issuers Must Get Central Bank Approval

Any party that intends to issue cryptocurrency in Malaysia should get approval from Bank Negara Malaysia (BNM), the Asian country’s central bank. This stance of the Malaysian Finance Minister, Lim Guan Eng, was reported by New Straits Times, a local English language news platform.

The Finance Minister said so when a Malaysian Parliament member, Dr Tan Yee Kew posed a question on the methods being used to ensure the protection of the local currency and the financial system as a whole from the effects of cryptocurrencies.

There is also a project that is looking into launching a Malaysian centrally banked cryptocurrency, called the Harapan Coin. The Harapan Coin is yet to be shown to the central bank or the Prime Minister, Dr Mahathir Mohamad. The coin has received mix responses, with one Parliament member suggesting that the government should implement proper cryptocurrency-related regulations before venturing into the space itself.

Dr Tan was of the opinion that cryptocurrencies should not be opposed, but these should be working under a decided frame of laws and regulations to ensure no adverse effect on the financial system of the nation”

I advise all parties wishing to introduce Bitcoin (like) cryptocurrency to refer first to Bank Negara Malaysia as it is the authority that will issue the decision on financial mechanism. It is not that we wish to obstruct [cryptocurrency] as we are keeping an open mind. But it is still subject to existing laws. Do not try to do something without guidelines from Bank Negara and commit something against the law.”

Although the government is taking the crypto revolution slowly to ensure no hasty decisions are made, it has come under fire for Harapan Coin, with many civic and political leaders criticizing the digital currency. One such group, the Centre for a Better Tomorrow (Cenbet), said that the government seems too eager to start off “trendy but untested schemes”.

 

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Malaysia Education Ministry to Develop Blockchain-based Degree Verification System

Malaysia’s education ministry (MoE) has announced that it is developing a blockchain-based degree verification system to combat degree fraud according to a recent tweet.

The official social media communication stated that the system is being developed in collaboration with a university consortium. The system is designed to be able to test and verify the authenticity of university degrees in the country and will include six public sector universities in the first phase.

The system is being built on the NEM blockchain, under the leadership of a professor from International Islamic University Malaysia.

The reason behind the pursuit of the new blockchain degree verification system is not just for the preservation of integrity and reputation of Malaysian universities but also to protect the rights of the students and promote the overall use and universal application of the Distributed Ledger Technology (DLT).

The program will serve as skills training for students trying to enter the blockchain sector and the consortium will also receive backings to develop industry-standard blockchain solutions that could help generate useful revenue for the participating universities through patented technology.

The move comes after various other universities have announced the development of similar blockchain-based degree verification platforms. The top engineering institute in the world, Massachusetts Institute of Technology (MIT) became the first university in the world to implement a degree issuing system that is based on blockchain back in October 2017.

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Malaysia Pushes Top Industries to Blockchain

Malaysia’s top three industries are being propelled into blockchain adoption in an effort to promote economic growth alongside transparency, efficiency, and sustainability with the help of a government task force.

The sectors being targeted by the Malaysian Industry-Government Group for High Technology (MIGHT) task force include renewable energy, palm oil, and Islamic finance.

In the energy sector, the government task force has held discussions with local companies to investigate how blockchain can assist in the growth of renewable energy users. Blockchain was decided to be of use in this area by providing transparency over how the energy was generated, be it from sustainable sources or not, meaning that customers can choose to purchase only green energy if they wish to do so.

Palm oil has become a contentious commodity due to a lack of ethical labor practices in its production, including reports of child labor coming from several countries. With blockchain, MIGHT wants to give buyers the ability to see that the palm oil they are purchasing from Malaysia comes from a government-approved ethical production line, while also setting up the government infrastructure necessary to monitor production in the country. Australia has also used a similar blockchain strategy to monitor the origin of sugarcane entering the country.

Islamic banking in 2016 accounted for 28% of Malaysia’s financial sector, with the government hoping they can increase this to 40% by 2020. MIGHT believes that blockchain can be used to offset the high costs of the strict ethical regulations that Sharia laws require from financial and banking services. Similar operations have already begun appearing in the Middle East where banks have started pegging debt to gold units, presenting this as a blockchain smart contract.

Bitcoin News has previously reported on the compatibilities of cryptocurrency and Sharia-compliant financial practices, with the first Islamic law abiding crypto exchange launched earlier this month opening the market up for Muslims.

 

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Malaysian Students Show the Way at the BlockchainSPIRIT Hackathon in Singapore

A University based in the UK is taking up the slack for Malaysia’s shortage of blockchain professionals. The institution, through its program, is helping develop the next generation of startup CEOs.

The University of Southampton Malaysia (UoSM), based in the UK has a split campus programme which allows students from Malaysia to study the first two years in their home country then the final two years at the world-class research center at Southampton University.

Blockchain developers are in short supply and also in high demand around the globe and on Upwork, blockchain developers are reportedly among the top 20 fastest growing jobs. UoSM works with industry to ensure their pool of talented students can contribute to new roles of the future.

A group of such Malaysian students from UoSM have just won an award at a competition in Singapore.

The team of four from the university competed in the BlockchainSPIRIT Hackathon at the Nanyang Technological University. They won the “Most Impactful Project” for an app designed by the group which improves courtroom recordings. Engineering students Do Wen Rei, Delveer Singh, and Chia Tze Hank, created ‘Legal-chain’, a solution that uses speech recognition technology to generate court transcripts for legal proceedings.

Do Wen Rei commented how they had struggled with selecting how to go about the process:

‘Being new to blockchain technologies, we had been struggling to choose which platform to use. We were fortunate that the technical trainers were patient with us and helped us get started” adding, “We did not expect to win this prestigious award. We are very proud to have had our project recognised in this way.”

Prof Rebecca Taylor, Pro Vice-Chancellor (Asean) and chief executive officer of UoSM said that she was highly encouraged that students from the University their practical solutions were recognised by professionals:

“Having students take what they have learnt from their course to create practical solutions, embodies our University Mission to change the world for the better…We are incredibly proud of the determination, passion, and inventiveness of our students and delighted that their efforts have been recognised by digital leaders in this way.”

As blockchain continues to make inroads in Malaysia, the government continues to show caution with its cryptocurrency regulation. The Malaysian Central bank, Bank Negara, has not outlawed cryptocurrencies and continues to allow exchanges to operate in the country. Malaysians are able to trade providing exchanges or individuals collect full details of the trader in addition to current ID.

The new guidelines were introduced earlier this year after Bitcoin’s drop in value.

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