Malaysia Fintech News - Dec 2017

Trade.io outlines exchange expansion & liquidity pool plans

Trade.io democratizes the financial market and saves money for investors through reducing and eliminating fees and inefficiencies by utilizing its innovative Blockchain trading platform. Trade.io is outlining its future plans of its exchange and liquidity pools following its successful ICO. It is committed to prioritizing its customers’ interest. Trade Token (TIO) will be listed on 11 January on OKEx and HitBTC exhchanges. To adhere to regulatory regimes, trade.io is seeking multiple licenses to service its clients in the most compliant manner possible. It will also be introducing a “24 Hours or Less” policy for inquiries via email, live chat and Telegram channel to reduce lengthy support wait times. It will hold face to face and online seminars worldwide to teach traders about crypto currencies. By engaging multiple safety protocols for withdrawals and having the entire platform construction being overseen by security experts, trade.io will be able to handle a continuous large number of customers. This exchange and liquidity pool is estimated to be delivered in middle to large March 2018.

Belfrics plans bitcoin exchange in Bahrain

Malaysia-based Belfrics Global is gearing up to open and operate a crypto currency in Bahrain after receiving a license from the Central Bank of Bahrain to try out the idea in the regulatory sandbox. This license is a gateway to the $50 billion digital payment in the Mena region alone.

Belfrics was founded in 2014 in Singapore, India and Kenya and provides point of sale and other payment technology to merchants wanting to accept cryptocurrency.

As part of its drive to become a fintech hub, Bahrain became an early adapter in the region with the sandbox framework and innovative payment systems. The CBB is partnerships by the EDB in spearheading fintech. Upcoming initiatives a $100 million venture capital fund-of-funds.

Bank Islam launches social finance platform, Sadaqa House

Bank Islam Malaysia Bhd recently launched its social finance intiative, Sadaqa House, aimed at providing products and services to collect sadaqah, waqf and hibah. It allows the public to realize social finance projects through digital crowdfunding partnerships with Ethis Ventures Sdn Bhd and GlobalSadaqa.com. This initiative is part of the banks’ digital journey to ensure convenience efficient servicing and easy implementation. It is also part of a strategic agenda to encourage community ethical investment to support economic development in undeserved sectors.

The bank is using technology in Shariah solutions that is aligned with current digital trend. With the promise to upload transparency, contributes can track the progress of their funds and the chosen project. This is expected to launch a multiplier economic benefits across the supply chain.

Ethis Ventures was recently incorporated in Malaysia by Ethis Pte Ltd Singapore to develop new Islamic fintech solutions while also being the only Shariah-compliant operator licensed with the P2P financing license by Securities Commission Malaysia.

Public may also contribute using Bank Islam services to donate into the Sadaqa House fund account, where the bank will match the raised fund at the rate of 1:1 to a maximum of RM500,000.

BIMB Investment launches big data and fintech fund with UK partner

BIMB Investment Management Berhad launched a fund (BIMB-Arabesque Asia-Pacific Shariah-ESG Equity Fund) investing in big data and finance technology companies in Asia-Pacific, with its strategic partner Arabesque Asset Management Holding Ltd, UK. It is the first Shariah and Environmental, Social and Governance (ESG) compliant fund. The target fund size is RM100 million over a one-year period.

Big data analytics is used to process more than 100 billions of data points in evaluating and analysing 7500 listed stocks in Asia Pacific region to identify the best 140 stocks on a quarterly basis. The fund is the first to implement a quantitative, rule-based technology in Shariah-compliant equities by integrating ESG sustainability analysis with financial analysis that fulfils the needs of clients with the right products, returns and seamless fund management processes across asset classes.

As of 2017, BIMB Invests assets has grown 118.21%.

The fund is offered for subscription at SGD0.08 and US$0.25 per unit for 21 calendar days during the initial offer period, from Jan 19 2018 until Feb 8 2018. The minimum initial investment required for the Fund is SGD167.70 or US$500.

HelloGold-Boost partnerships enables more users to purchase gold

GOLD savings platform HelloGold announced that it is partnering with Boost to integrate the HelloGold offer, allowing Boost users to buy 99.99% pure gold starting from SGD0.34 (US$0.24). HelloGold makes gold and other sophisticated financial products affordable to everyone. It provides an app-based platform that allows customers to buy, store and sell physical investment-grade gold. It is safely vaulted and can be delivered to the customer directly. Since its launch in April 2017, the app has had 20,000 downloads and won IRBA’s Most Innovative product award and been selected for MOFs TenXClub. It is currently developing an application using blockchain for the mass market, where end users benefit from technology without in-depth knowledge of it. In the long term, customers will be provided the option of converting their vaulted gold to a digital gold token (GBT). This enables customers to use the stored gold as value beyond the HelloGold System. Once the GBT are successfully traded on exchanges, the tokens will be available for purchase. This creates a stable cryptocurrency, fully backed on physical investment grade gold.

Govts are still coming to terms with cryptocurrency

Bank Negara in Malaysia is working on guidelines to regulate cryptocurrency. This guideline is aimed to be ready by early 2018. Virtual currency is a medium of exchange, alike the USD, but is not regulated by authorities such as central banks. It has been created for the purpose of digital data exchange via a process that is enabled through cryptography. Blockchain technology is decentralized, and is used to manage transactions for the bitcoin. Its possible to buy property with cryptocurrency, without the need for middlemen. It offers good security being encrypted and digital, with no chance of getting ripped off as compared to using standard payments systems. It also accessible in all markets. Other advantages include lower transaction costs, increased privacy and long-term protection of loss of purchasing power from inflation. Disadvantages include sizeable volatility in bitcoin prices, insecurity due to theft and fraud, and a long-term deflationary bias that encourages the hoarding of bitcoins. It is easier to launder virtual currency.

Cryptocurrency can spur growth, but must be Syariah-compliant

Financial innovations have an impact on Islamic banking and financial sector. Efforts are underway by Syariah advisor councils and national financial organisations to determine the nature, scope and legality of cryptocurrency for financial activities.

Cryptocurrency seeks to overcome restrictions of conventional banking and financial practices. Some argue that cryptocurrency was more secure and effective than “conventional banks, which operate using the principle of fractional reserve, which is prohibited by Syariah”. It must be moderated and legally accepted to spur economic internationalisation agenda and comply with Syariah requirements. It must be regulated by a central digital authority to provide a net of safety and transparency to buyers and investors.

Digital currencies remain tricky subject for Islamic finance

The role and status of cryptocurrencies within the Islamic system of values remains a hotly disputed issue in the Muslim world. Egyptian Grand Mufti Shawki Allam said that cryptocurrency was forbidden in Shariah as it causes harm to individuals, groups and institutions, and that such trades would carry risks of fraudulence, lack of knowledge, and cheating, very much like gambling which was explicitly forbidden in Islam. Other countries declaring a similar stance include Algeria, Morocco and Bangladesh. Other nations such as Malaysia, Indonesia and even Saudi Arabia accept cryptocurrencies and are currently working on market regulations, though with some slight protests and warnings. UAE and Saudi Arabia central banks launched a pilot initiative in December 2017 to test a new cryptocurrency for cross-border payments. In Dubai, One-Gram was the first company to set up a “Shariah-compliant” cryptocurrency called oneGramCoin and currently runs an Initial Coin Offering. This is because it was backed by gold and thus had intrinsic value, consistent with the need for there to be an underlying asset in Islamic finance.

Cryptocurrency a tax headache for regulators

Cryptocurrency are currently tax-free as digital currencies are yet to be recognized for tax purposes. Before any tax treatment can be imposed, the government will first have to define cryptocurrency. In the US, its Internal Revenue Service treats cryptocurrencies as a property, similar to bonds, for tax purposes and are subjected to capital gains tax. Every individual or business that owns cryptocurrencies will need to pay taxes on gains made upon the sale of cryptocurrencies, on gains made upon the purchase of a good or service with cryptocurrency and on the fair market value of any mined cryptocurrency. Singapore IRAS recognizes it as a service, and is subjected to the GST. Inland Revenue Board in Malaysia is trying to understand how cryptocurrency works, which parties are involved in it and how they should be taxed, as they can only tax when it knows how the profits are being made.

It is unlikely that individuals in Malaysia would be taxed for holding cryptocurrencies due to the difficulty in tracking the users. Since there is no capital gains tax in Malaysia, it is unlikely that holders would be taxed on long-term gains such as in US.

Play2Live, a Blockchain-based Streaming Platform for Gamers and eSports Fans, Secures $7M in Private Investment Deals and Launches 24/7 Live Rebroadcasts of eSports Events

While the blockchain industry is flocked with gaming projects, Play2Live claims to be different creating a unique economy of the streaming platforms based on the revenue sharing model. It uses a token called Level Up Coin (LUC) which acts as the sole internal currency within the currency. It can be converted easily to other cryptocurrencies or to flat money through a gateway/API.