Cryptobank

A very interesting concept. We have numerous exchanges the likes of Luno and in Malaysia but everything is done online. An exchange is very much like a money changer in Malaysia but we know today cryptocurrency has more use and one particular industry that it has stamp a very notable presence is the finance industry. The main players in the finance industry will be the banks but the conventional financial system is nowhere in terms of competitiveness compared to the various blockchain that exists today.

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We must discard the idea that cryptocurrencies are only only for the young ones and those that understand the blockchain. It must be made mainstream. So far, except for once in 2016 where our Central Bank has issued a warning to people involved in cryptos in particular the Bitcoin (BTC), our government and its central bank has been quite coy on its policies regarding digital currencies.

There are many factors that will favour the introduction of cryptocurrencies in Malaysia and it is as follows:

Speed of transaction
Costs of transaction
Lesser security risks
Prevents fraud
Easily accessible (mere availability of internet connectivity and a wallet is all it takes)
Recognised in almost all jurisdiction

Time is Ripe?

Apart from seeing an online presence of exchanges in Malaysia, personally I think the time is ripe for an Over the Counter (OTC) type of transaction. All this financial transaction needs in terms of compliance is the reporting and record keeping to comply with the following acts that could be deem applicable to the Malaysian Financial Market.

Financial Services Act 2013 (FSA)
Anti Money Laundering Act 2001
Capital Market and Services Act 2007

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If ever Malaysia is going to introduce a Payment Services Act like in other jurisdiction the main governing act to legitimise the entire transaction can be found in Financial Services Act but the scope of applicability and regulation must be refined either through regulations passed by the Central Bank of Malaysia provided that it recognises cryptocurrency as an asset or a currency representing asset.

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There are more than just what meets the eyes. The scope of services that could be offered by this Crypto Bank would prevent many illicit trades whereby the person conned may not have a proper avenue to redress their grievances or have proper records to protect himself against such transgression.

There are many areas that could be explored which includes the following:

Remittance
Letter of Credit
Fund Management
Smart Contracts to replace traditional Bills of Exchange
Smart Contracts to replace Bank Guarantees

The services above does not even include advancing loans but it provides a peace of mind to those that deals over the counter because this will be a regulated industry.

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