With the majority of Asian nations attempting to regulate cryptocurrency exchanges, the number of those declining to clamp down is dwindling. Malaysia is among those nations that are currently free from regulatory laws and are not imposing a ban on crypto.
According to the Malaysia Reserve, the country’s finance minister said that the central bank will not impose a blanket ban on cryptocurrencies as such action will only curb innovation and creativity in the financial sector, particularly fintech. In an interview with the news outlet, he stated:
The government is fully aware of the need to strike a balance between public interest and integrity of the financial system.
Similar to action in Thailand, Malaysia wants to inform and protect the public from making rash investments in the nascent crypto markets. The ministry said that the monetary authority is taking a cautious approach with digital currencies, including Bitcoin, to ensure safety measures are in place to protect the interest of the public.
The statement went on to say:
It is not the intention of the authorities to ban or put a stop on any innovation that is perceived to be beneficial to the public. However, similar to any financial and investment schemes, there is a need to have proper regulation and supervision to ensure any risk associated with such schemes are effectively contained.
Currently, Bank Negara Malaysia (BNM) does not regulate cryptocurrencies. However, it will ensure that exchanges comply with requirements to conduct customer due diligence and report suspicious transactions to the authorities. This is a similar stance to that taken in South Korea, where authorities have laid out plans to regulate how exchanges handle their clients to prevent money laundering and criminal activity.
The Malaysian finance ministry went on to state:
Financial innovation will not only enhance productivity of economic activities, but also make financial intermediation more seamless, it is imperative for the authorities to have a thorough understanding on digital currencies before embarking on any policy actions. This is particularly relevant to recent innovation like bitcoin, which remains unregulated globally and not battle-tested against shocks, unlike more conventional mediums of exchange.
With a global market capacity rapidly approaching $700 billion and the majority of crypto trading taking place in Asia, governments and central banks in the region need to get ahead of the game.
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