Malaysia Will Begin Regulating ICOs as Securities This Week

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NexChange
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Malaysia’s Securities Commission (SC) announced that it will begin regulating initial coin offerings (ICOs) and cryptocurrency exchanges this week, with a regulatory framework for digital assets expected to be launched by the end of the first quarter.

By regulating ICOs as securities, the SC notes that “the offering of digital assets, as well as its associated activities, will require authorisation from the SC and compliance with relevant securities laws and regulations.”

The guidelines will among others, establish criteria for determining fit and properness of issuers and exchange operators, disclosure standards and best practices in price discovery, trading rules and client asset protection. Those dealing in digital assets will be required to put in place anti-money laundering and counter-terrorism financing (AML / CFT) rules, cyber security and business continuity measures.

While the country’s securities watchdog will now have authority over the crypto space as of Tuesday, Finance Minister Lim Guan Eng told The Star Online that the move to regulate ICOs and crypto exchanges doesn’t signal a move by Malaysian regulators to curb the growing digital asset market.

“The Ministry of Finance (MOF) views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries.
“In particular, we believe digital assets have a role to play as an alternative fundraising avenue for entrepreneurs and new businesses, and an alternate asset class for investors,” he said.
However, a joint statement released by the SC and the Bank Negara Malaysia (BNM) in December that sought “to provide clarity on the regulatory approach for the offering and trading of digital assets” noted that digital assets are still not legal tender in the country. As CoinDesk points out, the statement has caused “some uncertainty over the regulatory status of cryptocurrencies as opposed to ICO tokens in the country.”
As for the newly regulated coin offering market, Lim told The Star Online that anyone “offering an ICO or operating a digital asset exchange without SC’s approval may be punished, on conviction, with imprisonment not exceeding 10 years and fine not exceeding RM10mil.”

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