The Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 - the law on digital currencies and digital tokens - has come into effect as of today, Jan 15, 2019.
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The Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 - the law on digital currencies and digital tokens - has come into effect as of today, Jan 15, 2019.
Beginning today, any person operating unauthorised initial coin offerings (ICOs) or digital asset exchange faces a 10-year jail and RM10 million fine.
Finance Minister Lim Guan Eng said, in a statement yesterday, that with this ruling, digital currencies and digital tokens or digital assets are prescribed as securities and will be regulated by the Securities Commission (SC).
Lim said such instruments and their associated activities must be first approved by the SC and need to comply with the relevant securities laws and regulations.
“The Ministry of Finance (MOF) views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries.
“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,” he said.
Following the statement by the Minister of Finance on the matter, SC clarified that they will put in place guidelines to regulate offering and trading of digital assets.
According to the regulator, 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.
Those dealing in digital assets will be required to put in place anti-money laundering and counter-terrorism financing (AML / CFT) rules, cyber security and business continuity measures.
With the coming into force of the Prescription Order, the offering of digital assets, as well as its associated activities, will require authorisation from the SC and compliance with relevant securities laws and regulations.
In order to implement the regulatory framework on digital assets, the SC and BNM will enter into coordination arrangements to ensure compliance with laws and regulations under the purview of both regulators. The relevant regulatory framework is expected to be launched by end-Q1 2019.