In a landmark ruling, Malaysia recently adopted a new law which will slap unregistered cryptocurrency exchanges and initial coin offerings up to 10 years in prison. The country’s top financial watchdog, Securities Commission Malaysia, announced that it will categorize cryptocurrencies like Bitcoin as securities.
In a press statement, the Securities Commission Malaysia, said that these new regulations have taken effect on Jan 15 This means that those who are planning to run and operate cryptocurrency services within the country will be required to obtain a license from the body.
The country’s head of the finance ministry Lim Guan Eng said that offenders of the newly established law will be met with stiff penalties. He added that these violators will be subjected to all security laws guidelines.
In a statement to The Star the minister said, “Any person offering an ICO or operating a digital asset exchange without SC’s approval may be punished, on conviction, with imprisonment not exceeding ten years and fine not exceeding RM10mil.”
As part of these new effort to crack down on illegal ICO and cryptocurrency operators, Mr. Lim directed the Securities Commission to work together with Bank Negara Malaysia, the country’s central bank, to release a complete legal framework that covers the whole cryptocurrency industry fore the end of the first quarter of 2019.
The crackdown have resulted in the publication of local cryptocurrency companies in Malaysia. These companies were established as trading platforms and they also offer crypto services such as wallets. On the other hand, the country;s central bank clarified that it will neither license or offer permissions to these companies for them to be able to continue their operations in the country.
Malaysia named a handful of companies that provide cryptocurrency services in the country. Among these companies are Belfrics Malaysia, Xbit Asia, Bit Malay, Upbit Malaysia, Bitpoint Malaysia, Udax International, Bit Trade Enterprise, Bxm, Openbit, and Luno Malaysia.
The ruling was not received well by crypto service operators in Malaysia. In response, the Malaysian Ministry of Finance issued a statement clarifying that their strict stance on cryptocurrencies comes in a time when a lot of people were defrauded by these crypto operators. There are also reports claiming that cryptocurrency services are being used to finance terrorist activities.
While Malaysia’s new cryptocurrency law target crypto operators and ICOs, there are no clear regulations regarding crypto miners. Some observers have noted that Malaysia while crypto operators are prone to fraudulent transactions, miners are somewhat secured to scams.