Bank Negara Malaysia Issues Cryptocurrency RegulationFebruary 27, 2018 4 comments
Following the public consultation issued by Bank Negara Malaysia in December, the central bank has announced the official cryptocurrency regulation in Malaysia under the policy paper “Anti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies (Sector 6)”.
The regulator emphasises once again that cryptocurrencies are not a legal tender in Malaysia and reminds the general public that they should still conduct their own due diligence when dealing with cryptocurrencies since there are no established avenues for redress for losses and damages incurred by parties dealing in cryptocurrencies.
It is important to note that according to this policy paper geared towards cryptocurrencies being uses a currency and not geared towards regulating ICOs which will likely fall under Securities Commission Malaysia.
Bank Negara Malaysia emphasises in this policy paper that reporting organisations i.e exchanges are not allowed to portray itself as a licensed entity under the central bank though they have reporting obligations to the regulator. Under Malaysia’s cryptocurrency regulation, exchanges are required to conduct adequate risk assessments on their customers in relation to the prevention of money laundering and financing of terrorism.
The exchanges are also subject to conduct Customer Due Diligence or better know as Know-Your-Customer (KYC) that are not entirely different from what licensed entities regulated by Bank Negara Malaysia are subject to.
In addition to that, should an exchange be making a new cryptocurrency available for trading they are required to submit their risk assessment in relation to money laundering and terrorism financing in writing to Bank Negara Malaysia.
The cryptocurrency regulation in Malaysia also states that as long as the activities are carried out in Malaysia, even exchanges without physical presence are subject to the regulation. It also requires the exchange to have a compliance officer based in Malaysia. This policy paper will come effect immediately.
The full policy paper can be found here