SC to reg­u­late dig­i­tal as­sets

Move seen to spur growth in dig­i­tal cur­rency sec­tor

The Star Malaysia - StarBiz - - News - By ROYCE TAN royc­[email protected]­

PE­TAL­ING JAYA: Reg­u­la­tory over­sight of dig­i­tal cur­ren­cies and to­kens, which kicks in from to­day, of­fers timely clar­ity and trans­parency to var­i­ous play­ers in the fledg­ling in­dus­try.

Omni Cap­i­tal Part­ners Sdn Bhd man­ag­ing di­rec­tor Scott Lim said every­thing would be above board with the reg­u­la­tion and gov­er­nance un­der the Se­cu­ri­ties Com­mis­sion (SC).

“Dig­i­tal as­sets in Malaysia have been un­der­whelmed mostly. A lot of peo­ple have been by­pass­ing Malaysia be­cause the pol­icy was not clear about it.

“Cer­tainly, now that this is reg­u­lated by the SC, it’ll be good. We shall wait for the guide­lines,” he said.

Cele­brus Ad­vi­sory co-founder Ed­mund Yong said the reg­u­la­tion is very much wel­comed and one which is needed, as it would spur growth in the in­dus­try.

Cele­brus is a com­pli­ance-first blockchain con­sul­tancy firm.

He added that the state­ment by the Finance Min­istry was very ac­com­moda­tive with the in­ten­tion to use to­kens and the recog­ni­tion of it as a fund-rais­ing tool.

“In fact, it can be an in­di­rect source of for­eign di­rect in­vest­ment, a bor­der­less method to raise funds.

“But from now un­til March 31, there will be a twi­light pe­riod. Many ac­tiv­i­ties will be stopped in their tracks be­cause they don’t know where they stand.

“Some would pos­si­bly even move off­shore be­cause of the dra­co­nian RM10mil and 10-year im­pris­on­ment pun­ish­ment,” said Yong.

He said dig­i­tal to­kens could also be for points in com­puter games or re­ward points, and it too would be quite dra­co­nian if it is all painted with the same brush.

The Cap­i­tal Mar­kets and Ser­vices (Pre­scrip­tion of Se­cu­ri­ties) (Dig­i­tal Cur­rency and Dig­i­tal To­ken) Or­der 2019 kicks in to­day and any per­son op­er­at­ing unau­tho­rised ini­tial coin of­fer­ings (ICOs) or dig­i­tal as­set ex­changes faces up to a 10-year jail term and up to a RM10mil fine.

Dig­i­tal cur­ren­cies and dig­i­tal to­kens are col­lec­tively known as dig­i­tal as­sets, which will now be pre­scribed as se­cu­ri­ties.

The SC is putting in place rel­e­vant reg­u­la­tory re­quire­ments for the is­suance of ICOs and the trad­ing of dig­i­tal as­sets at dig­i­tal as­set ex­changes in the coun­try.

This is ex­pected to be launched by the end of the first quar­ter this year.

Finance Min­is­ter Lim Guan Eng said the of­fer­ing of such in­stru­ments, as well as its as­so­ci­ated ac­tiv­i­ties, would re­quire au­tho­ri­sa­tion from the SC and needed to com­ply with rel­e­vant se­cu­ri­ties law and reg­u­la­tions.

“The Finance Min­istry views dig­i­tal as­sets as well as its un­der­ly­ing blockchain tech­nolo­gies as hav­ing the po­ten­tial to bring about in­no­va­tion in both old and new in­dus­tries.

“In par­tic­u­lar, we be­lieve dig­i­tal as­sets have a role to play as an al­ter­na­tive fund-rais­ing av­enue for en­trepreneurs and new busi­nesses, and as an al­ter­na­tive as­set class for in­vestors,” he said in a state­ment yes­ter­day.

Any per­son of­fer­ing an ICO or op­er­at­ing a dig­i­tal as­set ex­change with­out the SC’s ap­proval will face an im­pris­on­ment term not ex­ceed­ing 10 years and a fine not ex­ceed­ing RM10mil.

Fed­eral Ter­ri­to­ries Min­is­ter Khalid Sa­mad mooted the idea of the Hara­pan Coin last year, which would be the world’s first po­lit­i­cal fund-rais­ing plat­form us­ing blockchain and cryp­tocur­rency tech­nol­ogy.

In Novem­ber last year, share­hold­ers of Coun­try Heights Hold­ings Bhd ap­proved the com­pany’s plan to con­duct an ICO to is­sue its own cryp­tocur­rency, called “horse cur­rency”.

Coun­try Heights founder and chair­man Tan Sri Lee Kim Yew had said that the com­pany would like to be the first to launch cryp­tocur­rency in the coun­try when the reg­u­la­tions are ready.

The com­pany’s plan is to even­tu­ally is­sue one bil­lion horse cur­ren­cies backed by RM2­bil worth of phys­i­cal as­sets held by the hold­ing com­pany, with an ini­tial 300 mil­lion open to the pub­lic for cir­cu­la­tion.

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