Malaysian Financial Watchdog Clamps Down on Unregistered Crypto Exchanges

Malaysia is keeping to its crypto regulatory standards, and it seems that several cryptocurrency exchanges across the country now have to deal with the consequences. Last week, the Securities Commission of Malaysia published a press release which seemed to indicate that a vast majority of exchanges operating within the borders of the country hadn’t gotten the proper approval to do business.

In the release, the financial regulator revealed that there were only three crypto exchanges authorized to operate in the country. The exchanges are Sinergy Technologies, Luno Malaysia, and Tokenize Technology.

Essentially, no digital asset platform operating in the country, with the exception of those three, had been registered by the regulator. As such, all unregistered exchanges were ordered to shut down operations and reimburse funds to their investors and customers.

The three exchanges mentioned above were registered by the Securities Commission of Malaysia on June 4. Their registration was published in a press release on the day, with the regulator adding that they now had nine months to comply with its standards or be forced out the door as well.

Some of the regulatory standards in question might sound a tad harsh, but it seems that the companies have been able to hold their own so far. Included in the requirements that exchanges must fulfill include requests regarding stock trading rules, market and customer surveillance, and much more. The exchanges have also been asked to draft trading rulebooks and set up segregated bank accounts while they await their approval from the state regulator.

Clarity boom in Malaysia’s crypto industry

Malaysia has grown into one of the most attractive countries to open and operate a crypto business, and they owe this in large part to the current regulatory structure that they’ve managed to put up. 2019 saw a massive leap in the country’s crypto industry, as the government ratified cryptocurrency regulations in their entirety.

On January 14, news platform Reuters reported that Lim Guan Eng, the country’s Minister of Finance, enacted the Capital Markets and Services Order of 2019. The new regulation effectively classified cryptocurrencies, crypto assets, and digital currencies as securities, essentially meaning that they would now be put under the country’s Security Commission’s authority.

In addition to that, it was confirmed that from January 15, any individual caught operating any unauthorized Initial Coin Offering (ICO) in the country would be fined 10 million ringgit and face a possible decade-long jail term. In a statement to local news medium The Star, Eng said, “The Ministry of Finance views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries.”

However, while Malaysia is positive in its outlook towards crypto assets, there is still a drawback regarding ICOs. The Securities Commission published two papers seeing public feedback on its proposed ICO and property crowdfunding laws back in March, and while there is much hope that these laws would be clearly defined as well, nothing has materialized yet.