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Malaysian government isn’t a fan of cryptocurrency and it’s not hiding it as it plans to monitor the use of digital currency within its territory, a move that negates the operation of bitcoins.
The guidelines are still under public review and if it becomes effectives it mean cryptocurrency trading platforms will have to provide digital asset trade volume statistics, identify of all customers, and also monitor transactions going in and out of the exchange.
The new regulation will violate one of the features of bitcoin: anonymity and put under its grip the operation of the digital coins, that have changed the way the world sees money and investment.
The country’s central bank, The Bank Negara Malaysia (BNM), issued digital currency regulatory guidelines for its citizens and businesses residing in the region.
According to report by news.bitcoin, the new regulations will fall under the country’s anti-money laundering and anti-terrorism financing act of 2001.
‘A Digital Currency Exchanger Must Declare Its Details’
The new regulation drafted by the apex bank will apply to all trading platforms that deal with cryptocurrencies, and any individual can also be considered an “exchange” if they sell digital assets. For larger operations, there will be “transparency obligations” where digital coins trading platforms will be required to provide data to the BNM’s reporting entity.
“A digital currency exchanger must also declare its details to the Bank as a reporting institution,” the central bank says
According to the new stringent regulation, which is still under public consultation, any bitcoin and digital currency exchanger, who fails to declare the details of customers risks losing operating licence in Malaysia.
“Failure to declare its details as reporting institutions or comply with the reporting obligations may subject the digital currency exchangers to the enforcement and non-compliance actions as provided under the AMLA as well as the potential termination or denial of use of financial services in Malaysia.”
At the moment, cryptocurrencies like Bitcoin are not legal tender in Malaysia, and as the wind of digital coins blows across the world, the Malaysian government wants to know the volume of the daily digital coins traded in its soil.
As an additional measure, exchanges must comply with Know-Your-Customer (KYC) requirements when registering customers. The goal of verifying a user’s identity aims to provide adequate measures against money laundering, and terrorist financing, says the bank. At the moment digital currencies are not officially regulated, says the bank.
“The public is reminded that digital currencies are not legal tender in Malaysia,” the bank’s draft states. “Members of the public are advised to carefully evaluate the risks associated with dealings in digital currencies — This includes risks arising from high volatility in prices, the lack of deep markets and vulnerabilities to cyber-attack which can lead to significant losses.”
Users of digital currencies will also not be covered under established disputed resolution arrangements which exists for regulated financial institutions in the event of any dispute or losses.
BNM says they will be monitoring bitcoin and other cryptocurrencies to assess the risks retail investors face. The central bank has therefore urged the public to keep their feedback coming just as responses are due by January 14, 2018.
Malaysia isn’t the first to come up with this kind of law gagging the operation of digital currency, and we look forward to 2018 to be Digital Coin Revolution: It’d be the state versus the users.