Malaysia Announces Crypto Regulation Enforcement in Q1 2019

As the Malaysia government embraces and supports the growth of alternative financing options through blockchain, new Crypto Regulation is set to become effective as of Q1 2019.

A set of solutions for adopting blockchain technology into their economy will finally come into effect by Q1 2019, says Malaysia Finance Minister Lim Guan Eng at the FinTech Conference 2018.​

According to him, the regulations will focus mainly on digital assets, cryptocurrency exchanges and initial coin offerings (ICOs), and is part of Securities Commission (SC)’s efforts to facilitate alternative fundraising and investment in new asset classes.

According to his keynote at the FinTech Conference, “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.”

Previously, Lim stated that the Malaysian government is not opposed to cryptocurrency, but wants it regulated within a legal framework. In this case, interested parties are expected to follow the framework set up by Bank Negara Malaysia and the SC.

“Both Bank Negara and the SC, in terms of formulating this framework will be under the auspices of the Finance Ministry. The Finance Ministry will lead the committee comprising of Bank Negara, the SC, and the MOF itself,” the keynote said.

Lim also expressed the government’s interest in helping develop alternative finance avenues other than traditional ways of financing.

To do so, the regulatory framework will form a crucial part of the Malaysian government’s efforts to spur the growth of alternative financing for “high potential and innovative MSMEs.” By providing allocation for a co-investment fund for equity crowdfunding (ECF) and peer-to-peer financing (P2P) platforms, the government seeks to encourage growth from private sectors and reduce government fiscal burdens.

In Lim’s words, “through this, we hope to be able to achieve faster fund disbursements to support a broader range of deserving MSMEs, as well as provide greater transparency to how public funding are being utilized.”

There are only a few countries that embrace crypto into their laws and regulations around the world, most of which are in North America or Europe. With Malaysia starting to regulate cryptocurrency exchanges and ICOs formally, this could be the beginning of future crypto regulations enforcement in South East Asia.

Once the regulation comes into effect, it is predicted to give a significant boost to cryptocurrency adoption across the country.

“It is my wish that this fund will provide a boost for our ECF and P2P industry, as well as putting down a challenge for our operators – demonstrate your effectiveness as platforms to fund Malaysia’s innovative SMEs, and the government will channel more of SME funds through these market-based financing platforms, as part of further democratizing financing for SMEs,” Lim said.

The final details of the fund are being worked out by the SC, and the CIF is expected to be operationalized by early next year.