Effective immediately, Malaysia’s securities watchdog will now have the power to regulate all initial coin offerings (ICOs) conducted in the country as security offerings. All crypto exchanges will also fall under its jurisdiction.
More and more countries are rejecting the ICO model indicating that, yes, the age of ICOs may really be coming to an end. Malaysia is the latest country to curtail token offerings by officially making it a security. The finance minister of Malaysia released a statement on January 15th confirming the legal change.
As of now, all token offerings and exchanges trading will require registration with the Securities Commission (SC). Failure to comply will be met with harsh punishments, such as imprisonment of up to 10 years and fines of up to 10 million Malaysian ringgits (an excess of $2.4 million).
The SC has also announced they will be releasing a “full framework” on digital assets by the end of Q1 2019.
“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.”
These new regulations should not come as a surprise to crypto issuers in Malaysia. The Central Bank of Malaysia has said publicly that new regulations need to be put in place to reign in digital assets.
However, we should not view Malaysia’s new regulations as hostile to security tokens. The country is still relatively crypto-friendly, although overshadowed by countries like Singapore and their more-developed security token frameworks. Still, it is a step towards ushering in a new tokenized security era for the cryptocurrency space.
What do you think of Malaysia’s new regulation on security tokens? Will it hamper the industry? Let us know your comments below.
Image courtesy of Securities Commission Malaysia.