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 country’s 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 Malaysia’s (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 don’t have a bitcoin ATM yet because BNM has to come out with all these things (the framework) first.
“It’s very simple. With an ATM, you will know who’s withdrawing and depositing. There is a mechanism for knowing this. We’re 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 country’s 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 didn’t receive any letter from BNM on the matter.”
The company has said that it plans to set up 100 BTMs in Southeast Asia within the next three to five years.
Digital currency exchangers operating in Malaysia are to be designated as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001, and have to update the central bank on all transaction details, but this is yet to come into practice.
The value of Bitcoin – the world’s best-known cryptocurrency – has plummeted by almost US$2,000 (RM7,800) in the last week, a testament to its volatility. Bitcoin is currently selling for about US$9,500. It touched a high of nearly US$20,000 late last year.
Japan, the only country which boasts regulation of cryptocurrency trading, suspended operations of two exchanges, FSHO and BitStation, from March 8. It also cautioned seven other exchanges to review and improve the security measures for their platforms and submit the steps taken by them in this regard to the regulator by March 22. The action was taken after Coincheck fell victim to a heist of US$530 million worth of digital coins, fuelling concerns over the regulators’ purview of the intangible assets.
Meanwhile, Yuwarajan lauded Securities Commission Malaysia’s (SC) ban on Singapore-based company CopyCash, which had intended to launch an initial coin offering (ICO) here.
“I believe that if you have a valid project, then you don’t really need an ICO. Only a few ICOs are really valid in the market,” he opined.
“Everyone is into the trend of fundraising, they raise funds and do nothing. Actually, I haven’t seen a proper ICO until now and all the great tokens are not raised via ICOs,” he added.
In January, the SC ordered CopyCash Coin to suspend its marketing activity in Malaysia after it found that certain representations made by the company could fall foul of securities laws. The regulator also advised investors to be cautious of the risks of fraud and to exercise due diligence before participating in ICOs.