PETALING JAYA: The Securities Commission Malaysia (SC) cautioned the public against any initial coin offerings (ICOs) as it has yet to authorise any such offering pending the finalisation of its guidelines.
The regulator said in a statement that there has been an uptick in the number of queries and complaints from members of the public regarding ICOs and digital asset exchanges (DAXs).
The SC stressed that any offering of digital assets as well as its associated activities such as marketing or inducing others to subscribe to an ICO will require authorisation from the SC after the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 (Prescription Order) came into force on January 15, 2019.
The SC highlighted that unauthorised ICO schemes will put investors at risk of being exposed to fraud, money laundering and terrorism financing.
It said verifying the authenticity of the ICO issuers without a physical presence in Malaysia would be difficult and the recovery of the invested monies may be subject to foreign laws and regulations.
Furthermore, it said the ICO may be structured in such a way as to limit the legal protection and recourse for the investors against an ICO issuer.
There are also cyber-security risks including the hacking and stealing of online personal information.
The SC urged investors to be cautious when considering to buy or sell digital assets through trading platforms.
“Even though a platform may call itself an ‘exchange,’ it does not mean it has been authorised by the SC.”
Currently, only three recognised market operators have registered with the SC to establish and operate DAXs in Malaysia.
The three operators are Luno Malaysia Sdn Bhd, SINEGY Technologies (M) Sdn Bhd and Tokenize Technology (M) Sdn Bhd, which have been given nine months to fully comply with all regulatory requirements.
It stressed that no other online platforms are permitted to establish and operate a DAX in Malaysia, including those listed in SC’s initial transitional period list.
