BNM, SC urged to classify cryptocurrencies

KUALA LUMPUR: Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC) are urged to work together to define and classify tokens and cryptocurrencies to provide more clarity to the market, according to the Malaysian Blockchain Regulatory Report.
It said the uncertainty is unfavourable to the investors, consumers and businesses amid growing blockchain technology.
“While it is true that in the financial industry tokens and cryptocurrencies can be classified either as an asset, security or currency, if the two regulating bodies do not work in tandem there will be a lot of uncertainty in the industry as to how to deal with digital currencies and tokens,” the report noted.
In February, BNM issued a policy document on digital currencies, but the SC has not defined or classified the tokens.
Currently BNM does not regulate cryptocurrencies as it is not legal tender.
The research report, which was launched today, was conducted by the Faculty of Law of the University of Malaya (UM) and Quanta RegTech Capital plc (QRC).
It also highlighted that there is a need to clarify tax treatment of digital currency transactions and their exchanges.
“While the term ‘digital currency’ has been defined in the policy document on digital currencies with regards to digital currency exchanges. The question arises as to whether that definition of digital currency is sufficient for it to be regarded as ‘currency’ under the Income Tax Act 1967?”
Earlier, the Inland Revenue Board’s regulations and treaty division director Mohamad Fauzi Saat said the agency was still in the midst of studying the cryptocurrency market and no timeline has been set for the release of the cryptocurrency guidelines.
Project director for the regulatory report Nur Husna Zakaria said at a press conference today that she is positive on the blockchain development in Malaysia though regulation has not been put in place.
“None of the regulators in Malaysia has banned any transaction related to blockchain application, so it’s promising itself because some regulators in other jurisdictions have taken that step.”
She is hoping that the regulators could work hand-in-hand with the blockchain community, especially the industry players as it is a new technology with complexity.
“With that, whatever regulation put in place will be comprehensive and ensure the viability of any activities.”
Meanwhile, QRC group founder and CEO Adam Vaziri said regulators need to clarify how the cryptocurrencies should be taxed, be it in the form of income tax and capital gain.”There must be an official policy on the tax issue,” he added.
QRC is a venture capital that invests exclusively in blockchain RegTech.