The Securities Commission Malaysia has issued revised guidelines governing digital assets, effective as of Oct. 28. These are intended to regulate initial exchange offerings, or IEOs, and digital asset custodians.
According to the SCM, the rules aim to promote “responsible innovation in the digital asset space, while at the same time managing emerging risks and safeguarding the interests of issuers and investors.”
SCM first published a regulatory guide for IEOs back in January. This laid out rules which enabled companies to raise funds via token issuance only through an approved and registered digital asset exchange, but was not due to come into force until late 2020.
The issuance of these revised guidelines coincides with their enforcement and adds a requirement for IEO platforms to conduct due diligence on the issuer. This includes a responsibility to assess the issuer’s ability to comply with local guidelines on preventing money laundering and the funding of terrorism.
Despite the aim to facilitate innovation in the space, the guidelines explicitly state:
“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.”