What is Cryptocurrency?
A cryptocurrency is a sort of digital currency that uses cryptographic techniques to control its creation. You’ve probably heard of Bitcoin, which is currently the world’s best-known cryptocurrency.
Bitcoins and other types of cryptocurrency exist thanks to a technology called blockchain. Think of a blockchain as a public database that is distributed across many computers. Each cryptocurrency transaction is recorded in a ‘block’ of data, which is connected to other blocks of information in a ‘chain’.
Unlike regular money (like the Malaysian Ringgit), Bitcoin and the like are decentralised. This means they aren’t controlled by a central authority (such as the government). Instead, control is distributed among a large network of computers.
Is it legal in Malaysia?
Digital currencies are not recognised as a legal tender in Malaysia. This doesn’t mean that they are illegal, however. ‘Legal tender’ just refers to currency that is used as an official medium of payment. For example, US dollars are not accepted as legal tender in Malaysia – but that doesn’t mean that it’s illegal for you to use the US dollars if your retailer accepts them.
The Malaysian government has even announced that cryptocurrencies will not be banned. With that said, the Malaysian government does regulate digital asset exchanges – i.e. the platforms that you can use to trade Bitcoin and other digital currencies, hence any digital asset exchange that wants to operate in Malaysia has to comply with a set of regulation issued by the Securities Commissions (SC) of Malaysia. These regulations require exchanges to have robust measures in place to protect users and their assets.
Malaysian Cryptocurrency Regulation
Malaysia’s securities commission (SC), Suruhanjaya Sekuriti Malaysia, started regulating the country’s cryptocurrency industry on the 15th of January 2019, when “the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019” came into effect.
The Commission approved three cryptocurrency exchanges conditionally in the year 2019: Luno Malaysia, Sinegy Technologies, and Tokenize Technology. In January 2020, Luno met the regulator’s requirements and became the first exchange to received full approval. In April 2020, Tokenize Technology also met the requirements and received full approval from the Securities Commission Malaysia to operate a digital asset exchange (DAX).
