SC plans registration of cryptocurrency exchanges

KUALA LUMPUR: The Securities Commission (SC) Malaysia is in consultation with global regulators, looking at recent developments and different approaches taken by its counterparts, to establish a framework for the registration of cryptocurrency exchanges by year-end.

SC chairman Tan Sri Ranjit Ajit Singh said there have been discussions on cryptocurrency and it is well aware of it, at both domestic and global levels.

“We will have the appropriate regulatory posture around the cryptocurrency segment and look at what’s the appropriate framework that may allow the registration of some qualified cryptocurrency exchanges,” he told a press conference at the SCxSC Digital Finance Conference 2017 today.

He said the SC is currently working on the framework and wants to take advantage of discussions taking place at global regulators’ level. Chinese authorities have shut down cryptocurrency exchanges and banned funding for initial coin offerings. 

“There are different positions that have been taken by different regulators around the world. We want to be able to make sure that we’ve considered those developments. There’s a recent consultation network that’s been set up among the global regulators and we’re part of that.

“We want to first look at what positions are there, at the same time, we’re working closely with Bank Negara Malaysia to see what framework we will apply.”

Ranjit said the SC is in charge of the secondary market and its position on cryptocurrency trading will be to craft regulations so that these trading values have the right conditions in place for market integrity as well as for investor protection purposes.

The dominant cryptocurrency, bitcoin, has reached new heights in recent days bolstered by new regulation out of the US and Japan which looks to curb manipulation and limit supply of new coin offerings and CME Group’s, the world’s leading and most diverse derivatives marketplace, expected launch of bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods.

One bitcoin was trading at US$7,318.19 at the time of writing.

Ranjit also announced measures to liberalise Malaysia’s RM1.3 trillion bond and sukuk market by the first quarter of 2018 for retail participation. This involves reviewing the primary market issuance processes and disclosure requirements, as well as expanding the range of corporate bonds and sukuk offered to retail investors.

It also launched a centralised bond and sukuk information platform known as BIX (Bond+Sukuk Information Exchange) to provide easier access and comprehensive information on corporate bond and sukuk.

The equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms have funded 450 campaigns, raising a total of RM50 million to meet the financing needs of micro, and small and medium enterprises.

The SC introduced ECF in 2015 to provide early-stage financing for start-up entrepreneurs while the P2P financing framework, introduced in April 2016, aims to address funding needs of SMEs to raise working capital or capital for growth.

Second Finance Minister Datuk Johari Abdul Ghani said the government will establish a co-investment fund with RM50 million from existing grants to be co-invested in SMEs with private investors through ECF and P2P platforms.

He said the SC will assist in setting up the fund, and defining the co-investment criteria for both equity and debt-based financing. Once the fund is operationalised, it will co-invest in ECF and P2P financing campaigns ,which have managed to attract the required amount of private funding and other criteria.