Malaysian Security Commission gives local crypto exchanges by March to comply

Securities Commission Malaysia (SC) is a statutory body set up to regulate and develop the Malaysian Capital Market.

Kuala Lumpur, MALAYSIA – With the implementation of a digital assets prescription order, existing digital asset platform operators were invited to the Security Commission to be brief on what the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 entails.

Arrangements are in place to facilitate the operations of these platforms mainly local crypto exchanges for a transitional period until 1st March, subject to them fulfilling the conditions specified by the SC. Unfortunately, these platform operators will not be permitted to accept new investors and will only be allowed to facilitate the withdrawal or transfer of client assets with the written instruction of the investor for now.

Existing platform operators who failed to or did not attend the engagement with the SC on 17 January 2019 are advised to contact the SC immediately and not later than 25 January, failing which they shall be deemed to be operating a market in breach of the securities laws.

Once the relevant guidelines have been issued, existing platform operators will be required to apply to the SC for authorisation if they intend to operate beyond the transitional period. In addition, new prospective operators can also apply to the SC for authorisation once the guidelines are issued. All applications will be reviewed to ensure that they fulfil the relevant requirements.

In the case of initial coin offerings (ICOs), no person shall conduct an ICO without the prior authorisation of the SC moving forward. In this regard, the guidelines for ICOs will be issued by the end of Q1 this. In the meantime, ongoing ICOs should cease all activities and return all monies or digital assets collected from investors. While existing ICOs may be largely unaffected, there is still the possibility of pending of aforementioned guidelines to determine if any other requirements are needed.