Cryptocurrency exchangers to be identified by law

This will force them to conduct due diligence, keep proper record, and report suspicious transactions


Cryptocurrency exchangers will be identified as reporting institutions under the financial regulations, as the central bank imposes control on digital tradings.

“The central bank hopes that in early 2018, by January, exchangers who provide services for cryptocurrency will be identified as reporting institutions under the Anti-Money Laundering, Anti- Terrorism Financing and Proceeds of Unlawful Activities Act 2001,” Bank Negara Malaysia (BNM) financial intelligence and enforcement department director Abd Rahman Abu Bakar told a media briefing at the third Counter-Terrorism Financing (CTF) Summit 2017 in Kuala Lumpur yesterday.

“That will force them to conduct due diligence, keep proper record on customers and transactions, and report suspicious transaction activities, among others,” he said.

Malaysia joins several other countries including Japan and Australia who are taking centralised steps to regulate trading activities around virtual currencies.

The lack of legislation and the dramatic growth of market capitalisation for digital currencies have turned them into fads among investors, who traditionally put money in equity, property, currency, gold and unit trusts to expand their wealth.

In Malaysia alone, bitcoin daily trade has risen 500% to RM2.3 million as at September 2017, from just RM393,000 last year, showing more Malaysians are trading in the currency.

The gush in bitcoin activities has prompted many governing bodies to take preventive measures against digital currencies.

In China and Vietnam, regulators have resorted to an all-out ban on cryptocurrency trading, while the US is said to shadow Japan in licensing bitcoin exchanges.

On Wednesday, the central bank governor Tan Sri Muhammad Ibrahim said controls on cryptocurrency conversion are aimed at further securing Malaysia against money-laundering and terrorism financing.

Access Blockchain Association Malaysia VP Suraya Zainudin said she welcomes the announcement made by the central bank and looks forward for a clearer guideline for exchangers and crypto service providers to continue their operations.

“The move will set high standards for cryptocurrency players operating in Malaysia, and significantly discourage cryptocurrency usage for criminal purposes,” she told The Malaysian Reserve.

Meanwhile, the National ICT Association of Malaysia research committee chair advisor Woon Tai Hai said BNM should not try to control the system through its regulatory framework, but should engage industry players and cooperate with them to prevent criminal and money laundering activities.