Coming into effect last week and changing the cryptocurrency game in Malaysia were Anti-Money Laundering and Counter Financing of Terrorism policy guidelines. These new guidelines demand that cryptocurrency exchanges collect ID documentation and take other measures to prevent anonymity amongst traders.
It has been stated that the objective behind Bank Negara Malaysia’s policy 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 increasing the transparency of digital currency activities in Malaysia.”
The guidelines further state 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 new regulations will require cryptocurrency exchanges to collect a trader’s full name, address, date of birth and the customer’s ID. This isn’t it, the policy document further states that, “any person offering services to exchange digital currencies either from or to fiat money, or from or to another digital currency is subject to obligations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.”
With all that said, Bank Negara Malaysia has stated time and time again that cryptocurrency isn’t recognized by the bank or government as fiat currency. The reason for this is that cryptocurrency businesses are not protected by prudential and market conduct standards.
Amongst the other countries in Asia like South Korea and Japan, Malaysia has been one of the big game players. One has to wonder what kind of effect these regulation will have on traders within the country. Much of the allure of cryptocurrency comes from its decentralization and anonymity. Breaking away from these aspect can result in traders turning away from cryptocurrency. That said, Malaysia is definitely a place to have an eye on.