The Securities Commission Malaysia (SC), along with Bank Negara Malaysia (BNM), has issued a new “cautoinary statement” regarding investor interest in initial coin offerings (ICOs). This is not the first time SC has warned the public against dubious crypto offerings. Today’s statement affirms that ICOs may be activities subject to securities regulations as administered by both SC and BNM. Ominously, the two entities state, “carrying on such activities without proper authorisation is an offense.”
“Issuers of ICOs should be mindful that the launching of an ICO, the offering of digital tokens in exchange for digital currency or any form of payment and incidental activities thereof, may trigger regulatory requirements under securities laws. In addition, no person is permitted to carry out any regulated activities such as fundraising, fund management and dealing in capital market products without obtaining necessary approval or authorisation from the SC.”
Simultaneously, the Malaysia authorities state ICO operators are prohibited from undertaking such regulated activities like deposit taking and banking business, foreign exchange administration activities and remittances, without the necessary authorisation under financial services laws administered by BNM.
Members of the public are reminded to exercise caution before participating in an ICO.
Malaysia has broadly based Fintech innovation but ICOs have created a hazard as the space is has been largely unregulated. Recently, SC shut down the CopyCash Foundation ICO that was soliciting to Malaysian investors. CopyCashFoundation is registered in Singapore.
Both authorities said they will continue to monitor digital currency developments, and will not hesitate to take action against any person conducting illegal or un-authorised activities.