Securities Commission Malaysia Seeks Feedback On Regulatory Framework For ICOs

ICO News, News, Regulation | March 7, 2019 By:

The Securities Commission Malaysia (SC) is seeking public feedback on the regulatory framework for initial coin offering (ICO).

The regulator published the consultation paper on ICO to provide some background as to the nature of digital assets, some of the risks involved in investing in such digital assets and the proposed regulatory framework. The paper discusses the proposed framework for, among others, the eligibility of issuers, the need for transparent and adequate disclosures as well as utilization of proceeds of the ICO.

The SC said that it seeks to develop a regulatory framework that will balance promoting innovation with ensuring proper safeguards to protect the integrity of the capital market and investors’ interest.

“The lack of a regulatory framework for ICOs currently, exposes investors to the above risks and makes them vulnerable to fraud and manipulation,” the SC said. “Regulation is therefore required to mitigate the risks posed by ICOs for purposes of investor protection and promoting confidence in the ICO market. ”

The propsoed framework aims to balance the business needs of the industry while ensuring that adequate investor protection measures are in place taking into account the proposed benefits and risks posed by ICO activities. The regulator will be adopting a two-pronged approach to mitigate incidences of fraud while protecting market integrity.

“This approach entails an authorisation for the offering or issuance of the ICO and the registration of a disclosure document (Whitepaper) which complies with prescribed minimum requirements set by the SC,” the regulator said.

The consultation paper on ICO came after the SC amended its guidelines on Recognized Markets to introduce new requirements for crypto trading platforms.