Securities Commission to regulate offering and trading of digital assets

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KUALA LUMPUR (Jan 14): The Securities Commission (SC) will introduce guidelines to regulate the offering and trading of digital assets, including cryptocurrencies, it said.

In a statement today, the SC said the offering of digital assets and associated activities will require its authorisation and need to comply with relevant securities' laws, beginning Jan 15.

Note that Jan 15 is when the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 will come into force.

“The Securities Commission Malaysia (SC) will put in place guidelines to regulate offering and trading of digital assets,” it said, adding that those dealing in digital assets will be required to put in place anti-money laundering and counter-terrorism financing (AML/CFT) rules, cybersecurity and business continuity measures.

“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,” it further added.

SC said this announcement was made, following the statement by the Minister of Finance Lim Guan Eng on the coming into force of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019.

SC said it will, together with Bank Negara Malaysia (BNM), enter into coordination arrangements to ensure compliance with laws and regulations under the purview of both regulators, in order to implement the regulatory framework on digital assets.

Separately, Lim had said his ministry views digital assets, as well as its underlying blockchain technologies, as having the potential to spur 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.

The Finance Minister further said that the SC will put in place relevant regulatory requirements for issuing initial coin offerings (ICO) and trading digital assets at digital asset exchanges in the country.

“This framework is expected to be launched by end-Q1 2019. 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 RM10 million,” Lim said.