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Malaysia's Central Bank Issues Cryptocurrency Regulation

Malaysia's Central Bank Issues Cryptocurrency Regulation

Malaysia's central bank issues cryptocurrency regulation February 5th 2018 | Malaysia | Financial regulation The global frenzy around cryptocurrencies such as bitcoin and ethereum has caused prices to fluctuate wildly over the past year, with the price of bitcoin rising from roughly US$800/coin in January2017 to more than US$19,000/coin in December, before falling to around US$10,000 in early February2018, according to Coindesk, a news website. Malaysia has been no exception, with four crypto-exchanges currently in operation. As the market develops, concerns about criminal activity, fraud and tax evasion have led to increased regulation, which Bank Negara Malaysia (BNM, the central bank) hopes will strike a balance between security and innovation. Cryptocurrency mania has swept through Asia over the past year. Japan is fast becoming one of the largest cryptocurrency markets in the world, with nearly a third of bitcoin transactions conducted in yen. South Koreans have perhaps been the most active adopters, with its Bithumb exchange the world's busiest. Bitcoin specifically has achieved mainstream status, with bitcoin futures contracts now offered by CME Group, a Chicago-based derivatives exchange operator, and the Chicago Board Options Exchange. Malaysia has been no exception to the rule, with BNM data showing that the country's four main cryptocurrency exchanges trade an average of M$75m (US$17.3m) eachmonth. The sector's rapid rise has been touted as a major success for innovation and a new era for the financial sector. Blockchain, the digital code underpinning most digital currencies, has been heralded as a breakthrough innovation, with its distributed-ledger verification system currently being implemented by major international financial institutions to increase the Continue reading >>

Bernama.com - Concept Paper On Cryptocurrency To Be Finalised This Month - Bnm Governor

Bernama.com - Concept Paper On Cryptocurrency To Be Finalised This Month - Bnm Governor

Concept Paper On Cryptocurrency To Be Finalised This Month - BNM Governor KUALA LUMPUR, Feb 10 (Bernama) -- A concept paper on cryptocurrency will be finalised this month and made available for the public to decide on the future of this form of currency, said Bank Negara Malaysia Governor, Tan Sri Muhammad Ibrahim. "Basically, we are going to make the promoter of the cryptocurrency, which include bitcoin, ethereum and ripple, to be more transparent, the methodology transparent and the people behind it transparent too. "Hopefully, by doing this, the people can make their decision on whether to invest in cryptocurrency," he said during a question-and-answer session at the recent 40th Anniversary Dinner of Harvard Business School Alumni Club of Malaysia. Some 250 of Harvard Business School alumni attended the dinner. He said Malaysia was taking a slightly different approach towards the cryptocurrency, unlike some countries which decided to ban it. "We are not going to ban it for now, but we are going to let the market decide the future of cryptocurrency. The key point is that they must know what they are in," he said, adding that BNM did not recognise the cryptocurrency as the fiat money. Finance Minister II, Datuk Seri Johari Abdul Ghani, had said Malaysia would not impose a blanket ban on cryptocurrency trading as more locals bet on the new investment asset class and there was growing interest for a currency that was free from regulatory claws. He said banning the cryptocurrencies, including bitcoin, would only curb innovation and creativity in the financial sector, particularly financial technology. As of September 2017, there were over 1,100 digital currencies in existence. The cryptocurrencies are normally used outside the existing banking and governmental institutio Continue reading >>

Is Bitcoin Legal In Malaysia?

Is Bitcoin Legal In Malaysia?

Bitcoin seems to be all the craze these days. Its making financial headlines almost everyday. The news is usually about the price of Bitcoin hitting new highs, but there are also news about hacks where a lot of Bitcoin was stolen . Bitcoin is a cryptocurrency, which is basically a digital currency - just like the Ringgit, except it only exists on a computer. You can find the finer details here if youre interested. We wont go into a discussion about the features of Bitcoin, so well leave it at that a lot of people like the advantages Bitcoin offers over conventional currency like the Ringgit. Bitcoin has gained so much traction that some of our local shops have started accepting it, such as this Kelantanese nasi kerabu stall , and these noodle stalls in Puchong, Selangor . You might not have even questioned whether Bitcoin is legal in Malaysia, until some other countries started banning it . Our own Bank Negara was also deciding on how to treat Bitcoin in October 2017 (well get to their actual decision later). But in the first place, is Bitcoin legal or not? Bitcoin is not recognized as money in Malaysia One of the key features of Bitcoin is that its not issued by the Central Bank of any country. The thing is, this feature is exactly what makes Bitcoin not recognized as money in Malaysia (or not legal tender as the law puts it). Just like these ancient coins. Image from ngccoin In Malaysia, whats recognized as currency is controlled by the Central Bank of Malaysia Act 2009 (CBM 2009), and Part III of the Central Bank of Malaysia Act 1958 (CBM 1958). Under Section 20 of the CBM 1958, only Bank Negara has the right to issue currency in Malaysia - any currencies issued by other people are illegal. Section 20 of the Central Bank of Malaysia Act 1958 The Bank shall have the Continue reading >>

Malaysia's Bank Negara Publishes Regulations For Cryptocurrency Exchanges

Malaysia's Bank Negara Publishes Regulations For Cryptocurrency Exchanges

Malaysias Bank Negara the countrys central bank, has just published new draft regulations for cryptocurrency exchanges that take place within this Asian nation. Announcing the developments through its official website, Bank Negara asked the public to weigh in on the new regulations as a way of countering various crimes. BNM governor Muhammad Ibrahim expects the rules to be able to stop cases of money laundering and financing terror-related concerns using digital currencies in Malaysia. The announcement was on Thursday 14th, 2017, following months of work that involved ironing out the regulatory framework. Working on it started way back in September and brought together dignitaries at a Counter-Terrorism Financing Summit, although no one expected them to have been finalized by now. Back then, Reuters had reported the giant banks motives that were in line with the countrys anti-money laundering and anti-terrorism financing Act. Proposed Regulations Are Meant For Market Integrity And Investor Projection It isnt a secret that cryptocurrencies can be used in illegal deals, including funding terrorists. Bitcoins are decentralized , unregulated and highly valuable and thats why criminals prefer to use them instead of fiat currencies. And with Malaysia having many terror-affiliated criminals, maybe this will be a smart move. The proposed regulations would require corporates to verify identities of the clients, monitor all cryptocurrency-based transactions , and report any questionable dealings to the Malaysian authorities. Furthermore, the rules will need all companies to report usage statistics to the countrys central bank regularly. The draft regulations state that everyone would be advised to follow due diligence and assess the risks involved when dealing with anything that Continue reading >>

Malaysia's Bank Negara Lets Public Decide On Future Of Cryptocurrency

Malaysia's Bank Negara Lets Public Decide On Future Of Cryptocurrency

Malaysia's bank Negara lets public decide on future of cryptocurrency KUALA LUMPUR, Malaysia - Bank Negara, the central bank of Malaysia will release a concept paper soon for public to decide on the fate of cryptocurrencies. It will not recognise nor ban cryptocurrencies. A concept paper on cryptocurrency will be finalised this month for public to decide on the future of such currency, says Bank Negara governor Muhammad Ibrahim. He stressed that the central bank would not recognise cryptocurrency as fiat money. Bank Negara would also not ban cryptocurrency either but leave it to the market to decide on the fate of cryptocurrency. The key point is one must know what does it have internally. Basically, we will let the cryptocurrency promoters including bitcoin, ethereum and ripple to be more transparent, the methods to be more transparent and people behind the scene are to be more transparent too. By doing so, the public can decide on its own if they want to invest in cryptocurrencies, he said. Muhammad said this during a question and answer session at the 40th anniversary dinner of Harvard Business School Alumni Club of Malaysia. Unlike other countries which decided to ban on cryptocurrency, Malaysia adopted a slightly different approach. Finance Minister II Johari Abdul Ghani had said Malaysia would not completely ban transaction on cryptocurrency as such move would curb creativity and innovation in financial sector. As of September 2017, there are more than 1,100 types of cryptocurrency. On the other hand, Muhammad said according to data, many aged between 35 and 45 are bankrupt for owing credit cards. While increase in cost of living is true, people should also examine their lifestyle. He said currently 40 per cent of lower income group (income lower than RM3,855) st Continue reading >>

Cryptocurrency Traders Await Bank Negara Guidelines On Digital Coin Atms

Cryptocurrency Traders Await Bank Negara Guidelines On Digital Coin Atms

Cryptocurrency traders await Bank Negara guidelines on digital coin ATMs PETALING JAYA: Malaysia may have seen its first digital coin auto teller machine in 2016, before the global cryptocurrency craze peaked at end-2017, but the number has not grown beyond one because, as one operator sees it, the operation of such a facility currently falls under a grey area of the countrys existing laws. There was no mention of the regulation of digital coin auto teller machines more commonly known as bitcoin ATMs or BTMs in Bank Negara Malaysias (BNM) policy document on cryptocurrencies released about two weeks ago. Earlier, XBit Asia co-founder Yuwarajan K told SunBiz that the company will wait for a comprehensive framework on digital currencies before bringing in any bitcoin ATM. We dont have a bitcoin ATM yet because BNM has to come out with all these things (the framework) first. Its very simple. With an ATM, you will know whos withdrawing and depositing. There is a mechanism for knowing this. Were in talks with them (the central bank), but the framework has to be out, he said. Yuwarajan said XBit Asia, as a digital currency exchange which has been operating since September 2016, can operate BTMs which are connected to the platform, but they have chosen to hold off doing so while awaiting guidelines from BNM. PinkExc, another digital currency exchanger, brought in the countrys first BTM in 2016. Besides bitcoin, the machine, which is in Ipoh, also trades dash and litecoin. It allows trading of coins up to RM300 with a 10% processing fee per transaction. PinkExc founder Fitry Daud said the company is still in talks with Bank Negara on the operation of BTMs. We didnt receive any letter from BNM on the matter. The company has said that it plans to set up 100 BTMs in Southeast Asia Continue reading >>

No Ban On Dealings With Cryptocurrency Exchangers But Be Extra Careful In Due Diligence, Bnm Tells Banks

No Ban On Dealings With Cryptocurrency Exchangers But Be Extra Careful In Due Diligence, Bnm Tells Banks

No ban on dealings with cryptocurrency exchangers but be extra careful in due diligence, BNM tells banks Last updated on 27 February 2018 - 11:41pm PETALING JAYA: Bank Negara Malaysia (BNM) is not prohibiting banks from dealing with digital currency exchangers or businesses, but it expects them to be extra careful in their due diligence exercise in view of heightened money laundering and terrorist financing risks. The regulator stated this in a policy paper issued following a public consultation on the classification of digital currency exchanger as a reporting institution. BNM said it received feedback from representatives of existing digital currency exchangers, industry associations, law firms, financial institutions, academia as well as interested individuals. The central bank said banks should take a risk-based approach and conduct proper Know-Your-Customer/Customer Due Diligence processes in deciding whether to establish banking relationship with a digital currency exchanger. In practice, digital currency exchangers may be subjected to an enhanced due diligence process based on assessments by financial institutions of heightened money laundering and terrorist financing risks, it added. BNM said there is no restriction on using electronic means of performing the necessary CDD or verification of a customers identity, but such methods must satisfy the requirement under Section 9.3.3 of the policy paper, which stipulates that the process has to be as effective as one that is face-to-face. Reporting institutions (RI) can view identification documents physically or via electronic means, as long as the RI can reasonably determine their authenticity. BNM also said it has made an amendment to require reporting institutions to inform it of a material change or materially i Continue reading >>

Bank Negara To Release Concept Paper On Cryptocurrency In February

Bank Negara To Release Concept Paper On Cryptocurrency In February

Bank Negara to release concept paper on cryptocurrency in February Updated about 2 months ago Published on 10 Feb 2018 2:57PM 0 comments Unlike countries that have decided on an outright ban, Malaysia will not curb innovation and creativity in the financial sector, particularly in financial technology, by following suit. EPA pic, February 10, 2018. A CONCEPT paper on cryptocurrency will be completed and released this month for the public to decide for themselves whether they should invest, said Bank Negara Malaysia governor Muhammad Ibrahim. Basically, we are going to make the promoter of the cryptocurrency, which includes Bitcoin, Ethereum and Ripple, be more transparent, the methodology transparent and the people behind it transparent too. Hopefully, by doing this, the people can make their decision on whether to invest in cryptocurrency, he said during a question-and-answer session at the Harvard Business School Alumni Club of Malaysias 40th anniversary dinner, recently. About 250 of Harvard Business School alumni attended the dinner. He said Malaysia was taking a slightly different approach towards the cryptocurrency, unlike some countries which had decided on an outright ban. We are not going to ban it for now, but we are going to let the market decide the future of cryptocurrency. The key point is that they must know what they are (getting into), he said, adding that BNM did not recognise the cryptocurrency as fiat money. Finance Minister II Johari Abdul Ghani had said Malaysia would not impose a blanket ban on cryptocurrencyas there was avid and growing interest in a currency that was free of regulatory laws. He said banning the cryptocurrencies, including bitcoin, would curb innovation and creativity in the financial sector, particularly in financial technology Continue reading >>

Reasons Behind Bank Negara Malaysia's Regulations On Cryptocurrency

Reasons Behind Bank Negara Malaysia's Regulations On Cryptocurrency

Malaysias cryptocurrency guidelines determined that cryptocurrency isnt legal tender in Malaysia, and that exchanges need to adhere to KYC rules. The public needs to be careful when transacting in crypto, due to its volatility, and how Bank Negara wont be able to help in case of misconduct. Cryptocurrency is a nascent stage, but if it gains more commercial traction, countries might consider issuing a sovereign cryptocurrency as a safe alternative to counter the use of decentralised cryptocurrency. After a long wait, Bank Negara finally issued a cryptocurrency guideline in Malaysia in February; it basically decrees Malaysians can trade in cryptocurrencies, as long as exchanges and individuals collect information like theirfull name, address, and date of birth of all customers, in addition to ID documentation. This guideline came out after the market was left reeling from a recent crash in Bitcoins value . The regulator has also concluded that cryptocurrency isnt legal tender in Malaysia, so individuals who still choose to transact in them are encouraged to keep that in mind and conduct their own due diligencein case of robberies or losses. Malaysia follows a global trend looking to increase transparency in cryptocurrency tradersin hopes of a clear money trail, insight on thecryptocurrency cashflow in and out of the nation, and to help circumvent issues like money laundering. At the Malaysia Fintech Expo earlier this week, we managed to get some insight on why Malaysia has chosen to take a more permissive stance on the controversial coin. During a keynote speech by Tan Nyat Chuan, Director of the Payment Systems Policy of Bank Negara Malaysia (BNM), someamong the crowd stood up to ask questions relating to cryptocurrency. While Tan may not directly handle the crypto-regu Continue reading >>

New Malaysian Cryptocurrency Regulation Come Into Effect

New Malaysian Cryptocurrency Regulation Come Into Effect

New Malaysian Cryptocurrency Regulation Come Into Effect Last week, Malaysias new Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) policy guidelines specifically addressing cryptocurrencies came into effect. The new regulations compel Malaysian virtual currency exchanges to mandate KYC adherence, including the collection of ID documentation. Also Read: Two Indian Token Marketplaces Suspend Trading Due to Regulatory Pressure New Malaysian AML/CFT Guidelines for Cryptocurrencies Aim to Increase [] Transparency Bank Negara Malaysias stated policy objective is to ensure that effective measures are in place against money laundering and terrorism financing risks associated with the use of digital currencies, in addition to increas[ing] the transparency of digital currency activities in Malaysia. The new policy guidelines assert that Promoting greater transparency in the use of digital currencies serves to protect the integrity of the financial system and strengthen incentives to prevent their abuse for illegal activities The legislation came into effect on February 27th, with Bank Negara Malaysia stating that it [took] into account feedback received during the public consultation period on the exposure draft released on 14 December 2017. The bank added that the feedback it received mainly focused on the obligations imposed on digital currency exchangers, including businesses providing intermediary services involving cryptocurrencies. Malaysian Cryptocurrency Exchanges to Implement KYC Requirements The policy document states that Malaysian cryptocurrency exchanges are required to conduct customer due diligence on all customers and the persons conducting the transaction when the reporting institution establishes business relationship with customer and when th Continue reading >>

Malaysia's Central Bank Releases Draft Rules For Cryptocurrency Exchanges

Malaysia's Central Bank Releases Draft Rules For Cryptocurrency Exchanges

Malaysia's Central Bank Releases Draft Rules for Cryptocurrency Exchanges Dec 14, 2017 at 20:00 UTC|UpdatedDec 14, 2017 at 21:02 UTC Malaysia's central bank has published new draft regulations for cryptocurrency exchanges that operate in the country. On Thursday, Bank Negara Malaysia announced the move in a release on its website , asking the public to weigh in on measures aimed at easing money laundering and terrorist financing concerns related to cryptocurrencies. Following months of work in this area, the proposed regulations require businesses to verify their customers' identities, monitor transactions and report any suspicious activities toMalaysian authorities. Additionally, companies must report usage statistics to the central bank. If approved, the regulations would apply to any person or company which exchanges cryptocurrency on behalf of someone else.And while the regulations acknowledge that companies might use cryptocurrencies, the nation officially still does not recognize them as legal tender. "Members of the public are therefore advised to undertake the necessary due diligence and assessment of the risks involved in dealing in digital currencies or with entities providing services associated with digital currencies." Bank Negara Malaysia is taking written feedback on the draft rules until Jan. 14, according to the release. The regulations were explained by governor Muhammad Ibrahim last month as tools to prevent illicit money transmission. While the regulations will only apply to exchanges - "which are being referred to as "reporting institutions" - the country's securities regulator is looking at creating a framework for cryptocurrencies in general as well. The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalist Continue reading >>

Luno Registers As Reporting Institution With Bnm For Digital Currencies

Luno Registers As Reporting Institution With Bnm For Digital Currencies

Luno registers as reporting institution with BNM for digital currencies Luno registers as reporting institution with BNM for digital currencies Luno Malaysia says its registration is in compliance with BNMs requirement policy on AML/CFT UK-Basedcryptocurrency exchange Luno has formally registered with Bank Negara Malaysia (BNM) as a reporting institution for digital currencies. Luno Malaysia said in a statement yesterday that the registration is in compliance with BNMs requirement policy on Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) digital currencies. The policy document sets out the minimum requirements and standards that a reporting institution must observe to increase the transparency of activities relating to digital currencies and ensure effective and robust AML/CFT control measures are put in place, the statement read. Luno head of countries Vijay Ayyar said the company will continue to engage with various government agencies including BNM and other global regulators over the past year to ensure that the industry is well understood, and that any risk could be mitigated. We view any steps toward regulation of digital currencies as a very positive sign, he said. According to the statement, Luno has also begun processing pending withdrawals in Malaysia since March 29, 2018. The company had previously been unable to process withdrawals and deposits due to a temporary freeze on their Malayan Banking Bhd (Maybank) bank account. Currently, pending withdrawals are being processed in batches, while Luno continues to work on a long-term solution to process both ringgit withdrawals and deposits in Malaysia, the statement said. Country manager David Low said Luno is also conducting tests and working on solutions to process both deposits and withdrawa Continue reading >>

Meet The 9 Cryptocurrency Exchanges In Malaysia Registered With Bnm

Meet The 9 Cryptocurrency Exchanges In Malaysia Registered With Bnm

Bank Negara Malaysia has published the list of cryptocurrency exchanges in Malaysia that has registered itselves as a reporting entity with the regulator. This follows our report issuance of the policy paper titledAnti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies (Sector 6). While these entities are registered with the central bank we would like to reiterate as we did in our previous articles that, Bank Negara Malaysia emphasises in this policy paper that reporting organisations i.e exchanges are not allowed to portray itself as a licensed entity under the central bank though they have reporting obligations to the regulator. Investors in cryptocurrencies should also be mindful that since these exchanges are only reporting entities and not regulated entities, there will be no elements of consumer protection the will be no formal channels in which investors can seek redress should there be any losses incurred when dealing with cryptocurrencies. The regulation also does not address cyber-security aspects, which means if any losses were to be incurred due to hacks, it is likely that Bank Negara wont be able to intervene and protect the consumers. The policy paper and having exchanges report to Bank Negara Malaysia is only primarily geared at preventing money laundering and terrorism financing. With that out of the way, let us have a look at some of the cryptocurrency exchanges in Malaysia registered with Bank Negara Malaysia. Continue reading >>

Bank Negara Keeps Tight Rein On Digital Currencies With Policy Paper

Bank Negara Keeps Tight Rein On Digital Currencies With Policy Paper

Bank Negara keeps tight rein on digital currencies with policy paper KUALA LUMPUR: Bank Negara Malaysia is keeping a tight rein on digital currencies such as bitcoin with effective measures against money laundering and terrorism financing risks. In its policy statement issued on Tuesday, it emphasised that while digital curencies are not legal tender in Malaysia, it wanted to increase the transparency of digital currency activities in the country. Bank Negara highlighted the reporting obligations on the digital currency business are not an authorisation, licensing, endorsement or validation by the bank of digital currency exchange services, and that digital curencies are not legal tender in Malaysia. Its document, entitled Anti-Money Laundering and Counter Financing of Terrorism Policy for Digital Currencies (Sector 6), incorporated the feedback received during public consultation on the exposure draft released on Dec 14, 2017. It received feedback from representatives of existing digital currency exchangers, industry associations, law firms, financial institutions, academia as well as interested individuals. Bank Negara pointed out digital currency businesses are not covered by prudential and market conduct standards or arrangements that are applicable to financial institutions which it regulates. "Members of the public are advised to carefully evaluate the risks associated with dealings in digital currencies." BNM advised any persons involved in digital currencies to refer to the policy to determine its applicability and comply accordingly. "Persons covered under the policy as reporting institutions are expected to comply with the provisions of the Companies Act 2016 including the requirement to be incorporated or registered." According to the policy document any per Continue reading >>

Cryptocurrency A Tax Headache For Regulators

Cryptocurrency A Tax Headache For Regulators

Cryptocurrency a tax headache for regulators This article first appeared in The Edge Financial Daily, on January 22, 2018. KUALA LUMPUR: As interest in cryptocurrencies such as bitcoin, ethereum and ripple continues to grow in Malaysia amid Bank Negara Malaysias (BNM) stance not to enforce a blanket ban on these digital currencies, it is only a matter of time before the government considers taxing transactions and trading gains made on these assets. The price of bitcoin spiked to an all-time high of nearly US$20,000 (RM78,800) in December last year amid growing interest in the cryptocurrency before seeing a correction to trade at around US$11,500 last Friday. Other cryptocurrencies also rallied, driving the total market capitalisation of cryptocurrencies to a high of US$829.96 billion on Jan 7. The figure has since dropped to US$587.32 billion. So far, countries like the US, Singapore and Australia have tax treatments in place for individuals and businesses that accept cryptocurrencies as payments for goods and services, as well as those that trade these digital assets. In Malaysia, cryptocurrency transactions are currently tax-free as digital currencies are yet to be recognised for tax purposes. Nevertheless, there have been several cases of businesses and individuals using digital currencies as payment. These include the recently suspended Proton dealership in Seri Kembangan, Selangor, which went viral on social media after it announced that it would be accepting bitcoin and ethereum as a form of payment for car purchases, to the chagrin of national carmaker Proton Holdings Bhd. However, before any tax treatment can be imposed, senior lawyer and tax barrister Dave Ananth who also advises global information services group Wolters Kluwer on Malaysias goods and services Continue reading >>

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