Malaysia Released Drafts of Their Regulations on Cryptocurrencies

Bank Negara Malaysia (Central Bank of Malaysia) has recently released new draft rules for companies who are in the business of exchanging cryptocurrencies.

This release comes just a month after Governor Muhammad Ibrahim’s statement that under the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act, those converting cryptocurrencies into conventional currency will be designated as “reporting institutions”.

“This is to prevent the abuse of the system for criminal and unlawful activities and ensuring the stability and integrity of the financial system,” Governor Ibrahim had stated at the time while speaking to members who attended a counter-terrorism financing summit.

The very same notion now seems to have been instilled in the proposed set of regulations.

The proposed regulations that were issued for public consultation included a draft on the invocation of reporting obligations on digital currency exchange businesses as “reporting institutions”.

As reporting institutions, the digital currency exchange businesses are now required to obtain and verify detailed information regarding their customers, including their contact and identity information. The businesses will also require the monitoring of transactions. In case there are any suspicious transactions, the businesses will be required to report such activities to the authorities.

If and when the regulations are approved, they would apply to any person or company which exchanges cryptocurrency on behalf of someone else. 

Cryptocurrencies are still not recognized as legal tender

While it discusses the usage of cryptocurrencies and the individuals and businesses that transact them, the draft goes on to explain how the bank does not deem cryptocurrencies as legal tender.

It states in the draft that:

“The Bank reiterates that digital currencies are not recognized as legal tender in Malaysia. Members of the public are therefore advised to undertake the necessary due diligence and assessment of the risks involved in dealing in digital currencies or with entities providing services associated with digital currencies.”

It would apply changes to any new digital currencies and operations

It was also mentioned in the draft that reporting institutions will be required to identify and assess related risks that may arise pertaining to the development of new digital currencies and products. It further went on to include any new services and business practices, including new delivery mechanisms and the use of new or developing technologies.

The businesses are then advised that in case of such an instance, they will be required to undertake the risk assessment prior to the launch or adoption of such new digital currencies (including any related products and services), and to take appropriate measures to identify such risks. The businesses are then advised to document the risk assessment in writing as well.

The draft is open for discussion until January 14, 2018

The bank asked for written feedback and comments on the draft and urged the public to send in their input through post or email.

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By | 2017-12-19T04:32:06+00:00 December 19th, 2017|Cryptocurrency News|0 Comments

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