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Malaysia is planning to regulate initial coin offerings as securities offerings

Jan 31, 2019

We hasten to inform that Malaysia’s SC (Securities Commission) recently has commenced regulation of ICOs and crypto exchanges. New legislation (Capital Markets and Services Order) entered into force on Tuesday, January 15.

The new prescription order means that ICOs and exchanges would require additional confirmation from the SC prior to commencement of operations and would have to comply with local securities laws.

Minister of Finance, Lim Guan Eng stated:

“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].”

It is also worth pointing out that the SC in collaboration with the Central bank (Bank Negara Malaysia) together will prepare a complete legal framework on digital assets before the end of Q1 2019.

The Commission replies on this:

“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.”

The relevant companies, dealing in digital assets will be required to adhere to AML / CFT requirements, along with cybersecurity and other related measures.

In accordance with the statement of the Securities Commission and Bank Negara Malaysia 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 above-mentioned declarations still leave some level of uncertainty in relation to the legal status of cryptocurrencies in contrast to ICO tokens in Malaysia.

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