It always takes a while for regulation to catch up with new technologies and blockchain is no exception. Fueled in part by the growth of Bitcoin, other blockchain applications in countless sectors such as finance, trading and humanitarian, worldwide organizations have started researching and capturing its superior attributes. In response nations have to adjust their blockchain regulation to adapt to this ever-changing landscape. Being one of the countries which see the potential of blockchain technology and whose one of the most vibrant economy in Southeast Asia, Malaysia recently has announced regulation on this groundbreaking technology.
Malaysian banks are taking proactive steps to encourage Blockchain development in Malaysia. There are accelerators, conferences, and partnership offers from names like CIMB, Maybank, and UOB (1). Meanwhile, Bank Negara Malaysia (BNM), the Malaysian central bank, is expected to issue a directive to regulate the use of digital currencies in the country in early 2018. The central bank has been discussing and working on proposed cryptocurrency regulation (2).
Like the governments in other countries, BNM wants to regulate around the ugly side of blockchain, including illegal activities like money laundering or financing for terrorism. Foreseeing blockchain’s prospective application, blockchain regulation in Malaysia is likely not to ban but only shape regulatory framework around the technology like its neighbor, Singapore.
Regarding the initial coin offerings (ICOs), a radical new form of fundraising through cryptocurrencies, Securities Commission Malaysia (SC) has cautioned the investors of the risks it sees inherent in “digital token based fundraising activities/ investment schemes” (3) but not made them illegal.
A new technology, regardless of how groundbreaking it may seem, will definitely die if there is no support or even proscription from the government. The formal framework for blockchain regulation in Malaysia, fortunately, is rather open for Fintech (Financial Technologies, of which blockchain plays a significant role) generally. Recently, a website launched by Bank Negara Malaysia allows Fintech firms to view all the pertinent regulations, understand more about the sandbox and submit their fintech ideas. Informal panel discussions and quarterly regulatory bootcamps to help fintech firms better understand the regulatory landscape in Malaysia have been organized.
Notable fintech partnerships are those forged by Maybank including Samsung Pay in late 2016 and the MOU between Maybank and Alipay signed in March to enable Alipay’s mobile wallet in Malaysia (4).
According to a survey by Bank Tech Asia, across 70 financial institutions in ASEAN, many of which were from Malaysia, though hesitant about Fintech, most of them are interested to partner with Fintech firms and already have themselves a dedicated Fintech team (5). As one of the largest pieces of emerging Fintech solutions blockchain is likely to be deployed in the future of this nation. Consequently, the scrutiny of both Malaysian regulators and companies towards blockchain will push the government to bring in the most favourable standards in terms of blockchain regulation in Malaysia that can both control the landscape and benefit the country’s development. Malaysia’s fintech, specifically blockchain, while not fully matured definitely looks hopeful.
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