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Malaysia Fintech Regulatory Updates - October 2017

Guidelines for Cryptocurrencies to be released this year

Bank Negara is planning to release guidelines governing cryptocurrencies by the end of the year. The regulatory concerns identified by Bank Negara relate to money laundering from the use of digital and cryptocurrencies. Meanwhile local banks are expecting that the use of cryptocurrencies will continue to grow in Malaysia in future. McKinsey and Company released recent data which argues that digital banking penetration in Malaysia is expected to exceed 60% by the end of 2018.

MTDC aiming to support more fintech companies

The Malaysian Technology Development Corporation (MTDC) is reviewing fintech companies for potential funding. The Technology Ventures Division is looking to fund companies which have intellectual property and commercial promise. 14 technology sectors have been identified by the MTDC, including green-tech, biotech, electrical and electronic, semi-conductor industries, aquaculture breeding, Internet of Things (IoT) and artificial intelligence. A US$60 million fund has been approved for key sectors above.

Malaysia signs fintech cooperation agreements

The Securities Commission Malaysia (SC) announced it has signed a series of fintech cooperation agreements with the Hong Kong Securities and Futures Commission (SFC), the Dubai Financial Services Authority (DFSA) and the Monetary Authority of Singapore (MAS). In June 2017, the SC signed a MOU with Australian Securities and Investments Commission (ASIC) to cooperate on the development of fintech regulations. The recent MOU with Singapore will commence new training courses in the field.

The Securities Commission releases media statement on Initial Coin Offerings (ICOs)

The SC released a media statement regarding ICOs on the 7 September 2017. The media statement conveyed risks associated with ICOs and token offerings. The SC reminded the public of potential risks associated with ICOs and that many of such ICOs are not yet regulated by the SC. A list of activities regulated by SC can be found on the SC website. The SC also noted the following:

—scheme operators may not have presence in Malaysia. If there is a need to commence legal action it would be difficult;

—digital tokens traded on a secondary market may give rise to risks of insufficient liquidity;

—the structure of these ICO schemes might limit the legal protection and recourse for investors.

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