Crypto Trading Platform Guidelines Introduced By Securities Commission Malaysia

News, Regulation | February 1, 2019 By:

The Securities Commission Malaysia (SC) has amended its guidelines on Recognized Markets to introduce new requirements for crypto trading platforms.

According to the amended guidelines, any person in Malaysia who is interested in operating a crypto trading platform is required to apply to the SC to be registered as a recognized market operator. Operators must be locally incorporated with a minimum paid-up capital of RM5 million ($1.2M USD) upon commencing operations.

“The paid-up capital requirement is to ensure that potential operators have the sufficient financial resources to operate their market within a reasonable period of time,” the SC said. “If they don’t have the financial might to build a system, run the compliance and have the necessary cybersecurity measures in place and still have some money left over to pay salaries, it’s difficult to justify and to allow them to operate. SC also has the power to impose additional financial requirements if we think that the market size is too big or if the system is risky.”

Cryptocurrencies and digital assets have to be approved by SC prior to listing on the exchange. Operators are also required to ensure, fair, orderly and transparent market, have disclosure of processes on trading, clearing and settlement of digital assets, have security measures and testing of market infrastructure including custody arrangements, and compliance to related laws, among others.

“The new framework is part of the SC’s efforts to promote innovation while ensuring investor protection in the trading of digital assets,” said Datuk Syed Zaid Albar, SC Chairman. “While there is a framework to facilitate the trading of digital assets, investors are reminded to be mindful of the risks when dealing in digital assets such as sudden price fluctuations and liquidity risks.”

The guidelines came after the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 went into effect on January 15. Those interested in operating a crypto trading platform, including those operating within the current transitional period, have to submit an application to the SC by March 1. Separate guidelines on initial coin offerings (ICO) will be issued by end of March.