The Securities Commission of Malaysia has brought in the amended guidance to govern a range of functions in cryptocurrency markets, including digital asset custodian services and initial exchange offerings, better known as IEOs. The Securities Commission of Malaysia said the move is designed to support “responsible innovation in the crypto space, while at the same time managing emerging risks and safeguarding the interests of issuers and investors.” The financial regulator had published the regulatory guidance for IEOs back in January, creating a set of rules that companies could use for raising funds through token issuance on regulator crypto exchanges. The demand for coworking space has also increased in recent times.
The new guidance requires IEO platforms to carry out due diligence processes on issuers.
The guidance issued earlier is due to take effect by the end of this year, with the new guidelines now adding to the legal framework. The new rules require IEO platforms to carry out due diligence processes on issuers, including assessing the issuer’s suitability for meeting local compliance requirements with anti-money laundering and terrorism financing provisions. Companies offering digital asset custodian services will also be governed by the new amendments, which place similar burdens on custodians to meet with the new compliance threshold.
Digital currencies are not recognized as legal tender in Malaysia.
Alongside the new rules, the Commission is now accepting applications for licenses from digital asset custodians and IEO providers under the legal framework. While the guidance has been published to encourage innovation within certain legal parameters, it is unequivocal on the status of digital currencies and other digital tokens in Malaysia, which are not legal tender or a legitimate form of a payment instrument. “Digital currencies and digital tokens are not recognized as a legal tender nor as a form of payment instrument that is regulated by Bank Negara Malaysia.”