However, the SC says these exchanges are still legally bound to not process any new investments

By AFIQ AZIZ / Pic By BLOOMBERG

The Securities Commission Malaysia (SC) has allowed 22 digital asset exchanges to operate, while their applications are currently being vetted for regulatory approval.

This is done following the SC’s amended Guidelines on Recognised Markets on Jan 31, 2019, a directive for all exchanges to submit their application by March 1 this year in order for them to continue their ventures in Malaysia.

The Capital Markets and Services (Prescript ion of Securities) (Digital Currency and Digital Token) Order 2019 allows the government to punish any initial coin offering (ICO) activities and digital asset exchanges that operate without the SC’s approval with up to 10 years of imprisonment or fined not less than RM10 million.

These 22 exchanges are allowed to resume their businesses for a transitional period until further notice by the regulator.

Among the operators are the Perak-based PinkExc (M) Sdn Bhd, GetCoinApp Sdn Bhd, Xbit Asia Sdn Bhd, Chako Global Sdn Bhd and the UK-based Luno Malaysia Sdn Bhd.

However, the SC said these exchanges are still legally bound to not process any new investments into their account.

“During this extended transitional period, these platforms are not allowed to accept new investors and will only be allowed to facilitate the withdrawal or transfer of client assets with the written instruction of the investor,” the SC said in a statement yesterday.

While the SC is reviewing these 22 applications, the remaining 21 exchanges which did not comply to the deadline were instructed to return their investors’ assets by March 15, 2019.

“Companies which did not submit their application to the SC by March 1, 2019, are required to take necessary steps to cease their business and return all clients’ assets by March 15, 2019,” the SC added.

Among the firms are Big X Blockchain (M) Sdn Bhd, Cyberjaya-based BXM Sdn Bhd, Blockchain Street Sdn Bhd, Digital Fintech Sdn Bhd and VH Technologies Sdn Bhd.

The SC also said the notice will regularly be updated for public reference, especially when dealing with digital asset exchanges.

On Jan 15, Finance Minister Lim Guan Eng announced the activation of the Order 2019.

Subsequently, the SC introduced a framework to facilitate the trading of digital assets in Malaysia after an engagement session was held with digital asset exchange players.

The new framework will fall under the purview of its Guidelines on Recognised Markets, which is the same with what is used to regulate equity crowdfunding and peer-to-peer lending.

Under the same guideline, the regulator has amended a section to introduce new requirements for crypto exchanges.

The SC is also expected to issue separate guidelines on the offerings of digital assets via ICO by the end of this month.