The Securities Commission Malaysia has continued to provide clearer guidance to digital asset operators within their jurisdiction. The most recent of which features the approval of three digital asset exchanges during a ‘transitional period’ where all existing digital asset exchanges are required to apply for approval to operate.
Digital Asset Regulations for the Securities Commission Malaysia Explained
Malaysia is continuing to further its reputation as an advocate for Fintech innovation.
In January 2019, the Securities Commission Malaysia (SC) revised its Guidelines on Recognized Markets to support digital asset trading. It required all existing digital asset exchanges to apply for approval to operate within its jurisdiction. It called the phase a “transitional period” where the Malaysian digital asset space is progressing from an unregulated space to a regulated one.
In May, Malaysia’s Guidelines on Recognized Markets were updated to include registered digital asset exchanges identified by the SC as Recognized Market Operators (RMOs).
A total of three received such status to date, including 1) Luno Malaysia Sdn Bhd, 2) SINEGY Technologies (M) Sdn Bhd, and 3) Tokenize Technology (M) Sdn Bhd.
The three RMOs have been given a total of nine months to become fully compliant with all of the SC’s regulations.
The SC also noted that digital asset exchanges operating within its jurisdiction who have yet to receive the SC’s approval are required to cease all operations immediately, and return all monies and assets received from investors. Such operations without approval constitute a breach of securities law and are subject to imprisonment, a fine, or both, says the commission.
The Global Transition Towards a Regulated Digital Asset Industry
Regulatory agencies throughout the world are becoming increasingly involved in the realm of digital assets.
U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton has repeatedly said that nearly every Initial Coin Offering (ICO) he has seen, constitutes a securities offering— with the one exception of Ethereum.
Yet hardly any ICOs— if any at all— complied with the SEC’s existing laws.
As a result, the SEC has enforced its regulations on both ICOs and exchanges, with the most recent involving Kik and its ICO which raised $100 million back in 2017.
The U.S. SEC isn’t the only agency with such a stance. Regulators in Hong Kong, Spain, and other jurisdictions feature similar positions.
In response to the global situation, digital asset operators have seemingly turned to security tokens— digital assets which abide by their applicable securities laws and regulations. While ICOs currently raise 58 times less than they did just over one year ago, Security Token Offerings (STOs) saw a 130% increase in Q1 2019.
What do you think of the regulatory situation for digital asset operators in Malaysia? Let us know what you think in the comments section below.
Image courtesy of Securities Commission Malaysia.