BNM says no plans to issue digital currencies

Malaysia has no imminent plan to issue digital currencies as it does not recognise them as an actual currency, according to Bank Negara Malaysia (BNM).

The central bank has made it clear that bitcoin or any other sort of virtual currencies are not a legal tender in Malaysia, and has no immediate proposal to issue any sort of digital currencies by its own.

The Finance Ministry, in a written parliamentary reply, said those who use or trade in digital currencies have been doing so at their own risk as consumer protection is not guaranteed under any laws.

The ministry was responding to a query from Kampar MP Dr Ko Chung Sen, who asked the government if digital currencies are being recognised by the law and the country’s central bank.

“Digital currency has not been recognised as legal currency in Malaysia or any other country, as the ringgit is Malaysia’s only legal tender,” the written reply stated.

According to the government, any digital currency transactions involving regulated activities under the law governed by BNM or the Securities Commission Malaysia, such as withdrawal of deposits or capital market activities without proper authorisation, are considered as offences.

The Finance Ministry also stated that BNM estimated the average monthly transaction of digital currencies in Malaysia last year stood at RM75 million.

The ministry also said digital currencies are often exposed to the risk of value volatility due to speculation and abuse in activities such as money laundering, terrorist financing and cyber crime.

“From time to time, BNM will publish relevant information about the reporting institution so that prudent decisions can be made by the public,” it added.

Effective Jan 2, 2018, any individual or company involved in cryptocurrency exchange activities is classified as a reporting institution under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities 2001.

The reporting obligation is aimed at ensuring effective measures are being implemented against the risks of money laundering and terrorism financing in the use of digital currencies, as well as enhancing the transparency of digital currency activities in Malaysia.

The anti-money laundering and countering of the terrorism financing measures that need to be taken by money changers include the implementation of consumer due diligence and risk profile identification of money laundering and terrorism financing.

It is also to ensure the legitimacy of the funds obtained and creates an efficient internal control for tracking and reporting suspicious transaction.