Cryptocurrency Exchange Draft Rules Published by Bank Negara Malaysia

Announcements, News, Regulation | December 15, 2017 By:

Bank Negara Malaysia (BNM), the country’s central bank, has published a draft report on the obligations for cryptocurrency exchanges.

The central bank said that cryptocurrency exchange businesses will be designated as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (AMLA). The draft rules were aimed at ensuring that effective measures are in place against money laundering and terrorism financing risks associated with the use of cryptocurrencies, and to increase the transparency of cryptocurrency activities in the country.

Under the proposed policy, cryptocurrency exchanges are obligated to provide relevant information for the public to better understand and evaluate risks associated with the use of cryptocurrencies. Increased transparency will also serve to prevent the use of cryptocurrencies for criminal or unlawful activities. A cryptocurrency exchange business must also declare its details to the central bank as a reporting institution.

The central bank said the draft regulations are not an authorization or endorsement of any entities involved in the provision of cryptocurrency exchange services. It advised the public to carefully evaluate the risks associated with dealings in cryptocurrencies.

“The public is reminded that digital currencies are not legal tender in Malaysia,” said a central bank statement. “Accordingly, digital currency businesses are not covered by prudential and market conduct standards or arrangements that are applicable to financial institutions regulated by the bank. This is consistent with reporting obligations currently invoked under the AMLA on other reporting institutions such as legal or accounting firms and real estate agents which do not fall under the bank’s purview.”

BNM added that cryptocurrency users will also not be covered under established disputed resolution arrangements which exists for regulated financial institutions in the event of any dispute or losses.

BNM is inviting written feedback on the specific requirements set out in the exposure draft by Jan 14, 2018.