Since December, 2017
There was talk of introducing a regulation by Central Bank of Malaysia since last year and it was supposed to be introduced in December, 2017 but that regulation was never implemented. Instead it was an invitation for a public feedback regarding crytocurrency and the proposed method of self regulation by the government. This does not augur well for us especially when the world is changing ever so rapidly.
Members of the public are therefore advised to undertake the necessary due diligence and assessment of the risks involved in dealing in digital currencies or with entities providing services associated with digital currencies.
This was the only real statement made by the draft rules which serves no real purpose.
We start seeing our neighbours moving forward with their recognition of cryptocurrencies which is a direct impact on the economy and the financial sector by recognising the inevitable.
In South Korea, the government has establish Finance Supervisory Services (FSS) and made positive statements relating to their stance in dealing with cryptocurrencies.
"The whole world is now framing the outline (for cryptocurrency) and therefore (the government) should rather work more on normalization than increasing regulation,” said Choe Heung-sik, chief of South Korea’s Finance Supervisory Service (FSS).
In Thailand there was already an announcement to pass a regulation to regulate ICOs and cryptocurrency by March, 2018.
The Failure to React
Our government fails to realise that its failure to react towards the shift in market today is detrimental to the economical growth of the country. People who are law abiding and would want proper recognition for their ownership and investment in cryptocurrency would choose a state that recognises and regulates such operation. Contrary to popular belief that people who are involved in crytocurrency are more concerned about money laundering and escaping the authorities is not true.
Regulation in short means proper recognition, payment of taxes, stemming proliferation of terrorist related activities or stemming the scourge of money laundering. Now we are still unclear of the status of cryptocurrency whether it should be treated as a normal fiat, an asset or a digital currency representing an asset. Without proper classification there is problem in making declaration be it for taxes or monetary transfers.
In a State of Paralysis
There is no better description of the current state of affairs in Malaysia relating to its stance on crytocurrency. We know that is not illegal, what next? There is no proper status given to it. Can companies now use their reserve funds to purchase cryptos and have it reflected in their books and thereafter to be submitted for auditing. Would the conversion of local fiat into cryptos invite the need for declaration and proof of source of funds. How does it then prevent any act of terrorism or money laundering if there is no such check in place.
In short here is a simple questionaire that the government ought to consider
- Is there an expertise to fashion a regulation for cryptocurrency in Malaysia?
- If the answer is negative, then proper steps must be taken to outsource to the experts
- Even if the government is too busy to look into this area, it can adopt and adapt to existing regulations in other jurisdiction
- Why the need for public feedback and how the feedback affect the regulation?
- The economic loss that the nation suffers as a result of non action.
The rate in which the government response and its eventual implementation is indeed quite worrying. Whilst the entire financial system cannot be kept waiting and many has progress to be involved in the crypto realm, they have chosen a more reactive regulatory framework to avoid any complication with the law in the future and there goes a huge revenue.
The talk about having Fintech setups would be a farce if this is not addressed.