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Malaysia Legalized ICO And Tokens. Details To Be Approved In March

08 February 2019 09:40, UTC
Denis Goncharenko

Malaysia is an amazing Asian state, the federal constitutional monarchy which consists of 13 states and three federal territories. It became independent in the 20th century, and since that time until 2005, the country has enjoyed good economic development with average annual GDP growth of around 6.5%. In the early 1980s, Malaysia, formerly known as an agrarian country, has moved to industrial development, attracting foreign investors.

Today, Malaysia is a major exporter of agricultural and natural resources. The export of electrical engineering products and products and services of information and communication technologies takes an essential place in the country's economy. Besides, the state is an important center of Islamic banking — about 60% of the population is Muslim. Malaysia is a member of various trade organizations: World Trade Organization, APEC, ASEAN.

Several facts from the Malaysian economy:

  • The country ranks first in the world in the production of electronic chips and household air conditioners.
  • The service sector provides 59.1% of the state’s GDP, while the industrial sector gives 33.5%.
  • In 2017, exports from Malaysia amounted to $188.2 bln, imports — $163.4 bln; the largest export partners are Singapore(15.1%), China(12.6%), USA 9.4%).

The significant milestones in the development of the blockchain and crypto industry in Malaysia

Malaysia was one of those jurisdictions where regulators decided to pick a “wait-and-see” strategy, despite the statements made at the end of 2017. While regulatory decisions thundered around the world in 2018, and jurisdictions struggled to be more lucrative for crypto and ICO projects, Malaysia seemed to ignore this activity. Only in January 2019, the regulator came out with the clarifications, but let’s move on step by step.

For the first time, the authorities paid attention to Bitcoin in 2014. At that time, representatives of the Bank Negara (Central Bank of the country) conducted a series of studies jointly with the Central Bank of Singapore, eventually announcing that cryptocurrency is not a legal tender. For some time, the cryptocurrency activity in the country entered the gray zone.

In 2016, Bitcoin again loomed on the horizon as a solution for storing funds. Malays began to buy and keep cryptocurrency in response to rising inflation and the depreciation of ringgit, the national currency. In general, Malaysia unofficially became known as a favorable territory for crypto.

In September 2017, after a long silence, the Central Bank of Malaysia decided to issue guidelines for the industry, and in November they claimed to adopt laws on the regulation of cryptocurrencies. However, until the end of the year, nothing happened; the decision was delayed until the beginning of 2018.

02-03-2018 00:00:00  |   Regulation
2018 came and nothing happened neither in January nor in February. In March, the Central Bank announced the testing of the blockchain technology among nine banks, but still remained silent on regulatory issues, only occasionally reminding financial institutions of the KYC / AML requirements. Something strange was happening: the industry was developing on its own, and the authorities seemed to stand still and silent. So passed the whole of 2018.

2019 started with the changes

On January 14, 2019, Malaysian Finance Minister Lim GUAN ENG made a historic statement on the legalization of digital assets and tokens as securities, and on January 15, the resolution came into force. The Malaysian Securities Commission recognized ICO as a crowdsourcing method. The decision was sudden and caused a lot of discussion in the crypto community of the country.

“For our Blockchain Community of Malaysia we are so excited because now we can practice ICO projects openly with clear directions. Also this decision can protect the people because before that, the cryptocurrency was in the grey area and people couldn’t charge under any law if something bad happened to the ICO project,”

— shared his thoughts Effendy ZULKIFLY, the founder of Crypto Valley Malaysia and CEO at Blockchain Academy Asia. He also added that the announcement is made so drastically without the clear direction and they still to wait until March on the clear framework from Securities Commission. His colleague, the co-founder of Crypto Valley Malaysia, How TZE KOH was also positive about the news of wider acceptance of digital assets as a form of financial products and services, but also said the following: “The authorities should handle carefully so that there won't be over-regulation which could kill innovation. The general acceptance will be positive as they will see that the authorities are stepping in to provide a layer of guidance and protection to the industry and the public's interest.”

It is worth noting that the punishment is severe for an unofficially organized digital asset exchange or ICO in Malaysia — 10 years of imprisonment and a fine of 10 mln ringgits (approximately $2.4 mln).

Nevertheless, most representatives of the blockchain industry are positive about the changes. One can only hope that this step is the first in the right direction. We just have to wish it would be a good development of the crypto industry in this Asian region, and Malaysia will strengthen its positions in the industry.

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