Malaysia Developing Regulatory Framework For Digital Currencies

Malaysian central bank governor confirms work on cryptocurrency regulations is on-going, with focus on preventing terrorism financing and money laundering.

Muhammad Ibrahim, Governor of Malaysia’s central bank, has announced that the Bank Negara is currently working on drafting regulations for cryptocurrencies, and will be holding all persons and exchanges dealing with digital currencies liable as “reporting institutions”.

Speaking at the third Counter-Terrorism Financing Summit 2017 in Kuala Lumpur, Ibrahim said:

“Beginning 2018, Bank Negara will designate persons converting cryptocurrencies into fiat-money currencies as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (Amla) 2001.”

“This is to prevent the abuse of the system for criminal and unlawful activities and ensuring the stability and integrity of the financial system,” he added.

Concerns over the illegal uses to which Bitcoin might be put have been expressed by multiple governments and regulatory authorities, owing to the lack of regulation and KYC/AML adherence in the cryptospace. 

Most recently, the US Secretary of the Treasury Steve Mnuchin, expressed concerns similar to those voiced by Ibrahim, claiming that his department was keeping a close eye on Bitcoin, owing to its potential to be used for fraudulent activities, money laundering, and terrorism financing.

Commenting on the responsibilities of regulatory bodies in the face of new technological developments, Ibrahim said:

“We need to prepare ourselves … The advent of digital currencies as some have forecast, will mark the beginning of a new era in the financial sector. As authorities, we cannot be oblivious to these developments.”

Earlier this year in September, Ibrahim had announced that the Bank Negara was planning to roll out a regulatory framework for cryptocurrencies by the end of this year; cryptocurrency transactions in Malaysia are, at present, tax-free, since authorities do not consider virtual currencies as assets or legal tender. In addition to Malaysia, countries such as Russia are also working on drafting regulations for cryptocurrencies.