According to a notice from the country’s Securities Commission (SC), the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 will come into force on Jan. 15 following a statement from the finance minister this morning.
The prescription order means that token offerings and exchanges would require approval from the SC before starting operations and would have to comply with securities laws in the country.
“Any person 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 10 million Malaysian ringgits [$2.44 million],” Finance Minister Lim Guan Eng said in his statement, according to a report from The Star Online.
The commission also said that it will work with the central bank to issue a full legal framework on digital assets by end of the Q1 2019.
The SC explains that “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.”
Entities dealing in digital assets will be required to comply with anti-money laundering and counter-terrorism financing (AML / CFT) rules, as well as “cyber security and business continuity measures,” the agency said.
However, Lim added that “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,” according to The Star.
Last month, the SC and Bank Negara Malaysia, the country’s central bank, jointly explained that the new regulations are aimed to bring digital assets “within the remit of securities laws to promote fair and orderly trading and ensure investor protection.”
The statements leave some uncertainty over the regulatory status of cryptocurrencies as opposed to ICO tokens in the country.
“People have asked me if [cryptocurrency and digital currency] are legal or illegal. At the moment, the answer is neither legal nor illegal as the situation is still unclear,” Khalid Abdul Samad, the country’s territories minister, said in a New Straits Times report on Saturday.
Kuala Lumpur image via Shutterstock