SC Imposes Deadline For Crypto Exchanges Before They are Deemed Illegal

SC Imposes Deadline For Crypto Exchanges Before They are Deemed Illegal

by January 17, 2019

The issue of digital currency and assets regulation came into mainstream focus when Finance Minister Lim Guan Eng announced that Order 2019 will activate starting from the 15th January 2019. Soon after, the Securities Commission (SC) issued their own statement about the matter to furnish the public with further details.

And now the SC has released another statement to address another set of queries regarding the implementation of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019.

According to the regulator, they have invited and engaged with existing digital asset platform operators, and arrangements have been put in place to facilitate the operations of these platforms. A grace period will also be given to these operators to comply, up until the 1st of March 2019.

During this period, these crypto exchanges may not accept new investors and will only be allowed to facilitate the withdrawal or transfer of client assets with the written instruction of the investor.

Existing platform operators who failed to or did not attend the engagement with the SC on 17 January 2019 are advised to contact the SC before the 25 January 2019. Failure to do so means that the SC will deem them to be operating a market in breach of the securities laws which could lead to RM 10 Million in fines or 10 years imprisonment.

Once the relevant guidelines have been issued, existing platform operators will be required to apply with the SC for authorisation if they intend to operate beyond the 1st of March. Prospective operators can also apply to the SC for authorisation once the guidelines are issued. The SC will evaluate all applications and will only authorise market operators that fulfil the relevant requirements.

The SC also covered initial coin offerings (ICOs) in their announcement; no one can conduct an ICO without authorisation from the SC first. The regulator also confirmed that guidelines for ICOs will be issued by the end of Q1 2019. To that end, the SC ordered ongoing ICOs to cease all activities and return all the money or assets collected from investors.