Malaysian Finance Ministry: Cryptocurrency Adoption Remains Low

Malaysia’s finance ministry says both domestic and global adoption rates of cryptocurrencies are low, notwithstanding the significant attention the disruptive sector has garnered.

In its Economic Outlook 2020 report released today, the ministry nonetheless noted that several prominent firms in key economic sectors had taken steps toward digital currency adoption, according to a business news report from Bernarama on Oct. 11.

Malaysia’s crypto regulatory landscape to date

“Although the impact of these projects has yet to be felt more widely, digital assets may well emerge as a part of the wider economy or recede into the background as a novelty, depending on the outcome of its usage,” the report is quoted as stating.

The ministry has urged global authorities to formulate frameworks to tackle the issues raised by digital assets, noting that close monitoring of the sector’s development is essential.

The report took stock of domestic financial regulators’ work thus far, including Bank Negara Malaysia‘s amendment to  Anti-Money Laundering and Countering the Financing of Terrorism regulations in February 2018 to include requirements for digital asset service providers.

In January 2019, Malaysia's Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 came into effect to regulate both digital assets and exchange platforms.

The Order determines that any digital assets offered as a form of investment or used as a method of fundraising are classified as securities in the country.

Meanwhile, the Securities Commission Malaysia (SC) updated its Guidelines on Recognised Markets to include regulatory requirements for digital asset exchanges (DAX), registering three DAX operators within its scope in May 2019.

As of May, DAX operators were given nine months to become fully compliant and operational and are now the only venues deemed legitimate by the regulator to offer digital asset trading in Malaysia.

The ministry’s report also noted the Securities Commission’s initial coin offerings public consultation paper and its intentions to introduce formal guidelines in the near future.

Significant domestic blockchain pilots 

As regulatory provisions evolve, the report referred to noteworthy domestic experiments and pilot projects on the implementation of blockchain technologies within the wider economy. 

These span the Securities Commission’s Project Castor for unlisted and over-the-counter markets; Bank Negara Malaysia‘s blockchain-powered trade finance applications together with nine banking partners; the Ministry of Education's initiative to use blockchain for the issuance of qualifications, as well as as the basis of a higher education consortium and Bursa Malaysia's pilot blockchain project for securities borrowing and lending.

In June, Cointelegraph reported that Malaysia had launched a work visa program targeting tech freelancers in order to address the demand for blockchain talent.