BNM will not impose a blanket ban on cryptocurrencies, including bitcoin

BY P PREM KUMAR

Malaysia will not impose a blanket ban on cryptocurrency tradings as more locals bet on the new investment asset class and growing interest for a currency that is free from regulatory claws.

Finance Minister II Datuk Seri Johari Abdul Ghani said the central bank will not impose a blanket ban on cryptocurrencies, including bitcoin, as such action will only curb innovation and creativity in the financial sector, particularly financial technology.

“The government is fully aware of the need to strike a balance between public interest and integrity of the financial system,” he told The Malaysian Reserve in a recent interview.

Johari said the monetary authority is taking a cautious approach with digital currencies including bitcoin to ensure safety measures are in place to protect the interest of the public.

“It is not the intention of the authorities to ban or put a stop on any innovation that is perceived to be beneficial to the public,” he said.

“However, similar to any financial and investment schemes, there is a need to have proper regulation and supervision to ensure any risk associated with such schemes are effectively contained,” he said.

Johari said although Bank Negara Malaysia (BNM) does not regulate digital currencies presently, it will ensure digital currency exchanges (DCEs) comply with requirements to conduct customer due diligence and report suspicious transactions to the authorities.

While plans are in place for the central bank to recognise regulated DCEs, Johari (picture) said the appointments will only be done with the proper cryptocurrencies regulation in place.

He said information obtained from the DCEs through this policy implementation will be made available to the public, which would help both the public and relevant authorities, including BNM, to make informed decisions relating to the market.

The move is in line with measures taken by regulators in Australia and China recently.

Johari said the recent measures meted out by the central bank were to pre-emptively manage the growing interest in cryptocurrencies.

The move will also make digital currency activities more transparent in the country, which is important for the public to better understand and evaluate the risks of dealing in digital currencies.

Johari said any financial innovation that is underpinned by technology including digital currencies and e-wallets should be part and parcel of Malaysia’s digitalisation roadmap to ensure the country captures the digitisation value chain across the board.

“Financial innovation will not only enhance productivity of economic activities, but also make financial intermediation more seamless,” he added.

Johari said it was imperative for the authorities to have a thorough understanding on digital currencies before embarking on any policy actions.

“This is particularly relevant to recent innovation like bitcoin, which remains unregulated globally and not battle-tested against shocks, unlike more conventional mediums of exchange,” he said, adding that the monetary authority will look into the matter and engage all relevant stakeholders.

Johari said Malaysians should be cautious in dealing with digital currencies, including assessment of associated risks such as hacking and price volatility.

According to Fortune, although bitcoin is the predominant cryptocurrencies in the world, it only accounts for just over half of the crypto market capitalisation as new currencies are being developed, launched and spent.

Unlike normal currencies, the value of one unit of bitcoin — one BTC — has no intrinsic value, since it is not backed by any physical assets, or guaranteed by a sovereign government or central bank.

Instead, its value depends solely on its acceptance as a currency, and the public’s confidence in bitcoin.

In December 2017, one BTC rose to US$17,000 (RM69,700), or 1,700% higher than in early 2016 with a market capitalisation larger then Malaysia’s GDP in 2016.