Cryptocurrency exchange confusion
A LIST of digital currency exchanges published on the website of Bank Negara has stirred some level of interest. It has led some quarters to think that this list is some kind of sanctioning given by Bank Negara to this group of exchanges.
However, this does not seem to be the case. For starters, the list appears on the central bank’s website under the “Consumer Alert & Updates” section. It merely states that these exchanges are reporting institutions. Bank Negara has reiterated its official stance, namely, that the public must be cautious of digital currency investments and that digital currencies are not legal tender.
The central bank also does not regulate nor does it recognise digital currency exchanges. This clearly means that Bank Negara is not in any way giving its blessings to these exchanges.
What is also worrying, especially if parties are taking this list to be a central bank endorsement, is that the parties behind one particular exchange on the Bank Negara list seem to appear in allegations of running investment scams.
The Internet has a few postings alleging that one of the shareholders of one of the exchanges listed on Bank Negara’s site is involved in a multi-level and bitcoin scam. One wonders if the authorities have any ongoing investigations into that. Under central bank rules, reporting institutions are required to comply with all requirements of the Anti-Money Laundering and Counter Financing of Terrorism – Digital Currencies (Sector 6) policy document issued on Feb 27.
These institutions also come under the purview of the AntiMoney Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 or better known by its acronym, AMLA.
In the case of digital exchanges, being on the central bank’s list of reporting institutions does not mean that it is licensed.
What it could mean, though, is that the central bank may be taking steps to regulate activities in this space despite officially saying it does not. Whether or not this will lead to licensing, only time will tell.