Crypto regulatory framework to be ready by next year

PETALING JAYA: The regulatory framework for digital assets or cryptocurrency exchanges and initial coin offerings (ICOs) is expected to come into force by the first quarter of 2019.

In announcing the impending rollout of the new regulation, Finance Minister Lim Guan Eng quipped that it would be the first important task for the new chairman of the Securities Commission (SC).

“This is the first task of the new chairman (of the SC). Even though it is a big task for him, I’m sure he can put it out in the market soon,” Lim said at a press conference after officiating the SCxSC Fintech Conference 2018 here yesterday.

Newly appointed to the post, SC executive chairman Datuk Syed Zaid Albar revealed that the capital market regulator was currently still in the midst of drafting the regulatory framework for digital assets or cryptocurrency exchang- es and ICOs.

A corporate lawyer by training, Syed Zaid took over from Tan Sri Ranjit Ajit Singh as the SC’s head on Nov 1 after the latter retired on Oct 31.

Meanwhile, Lim urged all parties, including ministers, to refrain from discussing proposals of introducing new digital assets or bitcoins, including the idea for a Harapan Coin mooted by Federal Territories Minister Khalid Samad earlier this month, until the regulatory framework is rolled out early next year.

“I always say this, if you want to get into any venture, you must look at these ‘C’s... the idea must be able to encourage certainty, clarity, consistency and continuity. This is especially so when you talk about financial instruments,” Lim explained.

Earlier in his keynote address, Lim said appropriate regulations for digital assets and ICOs had to be put in place and enforced to safeguard the interest of investors.

He noted that interested parties must work within the framework jointly set up by Bank Negara and the SC and ensure that they are in full compliance.

“While we want to encourage (alternative fund-raising avenues and new investment asset classes), we also want to comply with the law to ensure that the investors know what they are getting into,” Lim said.

Meanwhile, Lim said the regulatory framework for “Property Crowdfunding” remained on track for release by early 2019, as previously announced.

The “Property Crowdfunding” platform is set to be an alternative source of financing for first-time home buyers, which would be the first of its kind in the world.

Separately, Lim noted that the RM50mil co-investment fund (CIF) established by the government is expected to be operationalised by early 2019.

The CIF is an initiative to co-invest in micro, small and medium enterprises (MSMEs) with private investors through equity crowdfunding (ECF) and peer-to-peer (P2P) platforms.

“The final details of the fund are being worked out by the SC and the CIF should be operationalised by early next year,” Lim said.

He noted that the CIF, worth RM50mil, would match investments from private investors on a 1:4 basis, that is, RM1 from the government and RM4 from private funds.

Syed Zaid noted that to date, the 13 registered ECF and P2P platforms in the country have collectively raised more than RM200mil for nearly 500 MSMEs.

“To build on the success and scale up this segment, the SC is assessing new applicants for both the ECF and P2P platforms, and is expected to make an announcement in the first half of 2019,” Syed Zaid said.