Bitcoin Price Malaysia

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Bitcoin Regulation and Bitcoin Tax in Malaysia

The Malaysian Government’s regulations on Bitcoin have just come into effect. Malaysia’s new Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) policy guidelines has started all cryptocurrency exchanges are now obliged to ensure Know Your Customer (KYC) policies are enforced including collecting ID Documentation. The legislation became law on the 27th of February and states that Malaysian Cryptocurrency exchanges, “are required to conduct customer due diligence on all customers and the persons conducting the transaction when the reporting institution establishes business relationship with customer and when the reporting institutions have any suspicion of money laundering or terrorism financing.”

Bitcoin in Malaysia is alive and well. Although some regulations are being instituted by the Government through the Bank Negara Malaysia, these are comparatively light compared to the strict and heavy handed regulations some other Asian nations such as S. Korea and China are enforcing.

Draft regulations issued by the Bank Negara Malaysia clearly points out reporting obligations on digital currency exchange business under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA). The purpose being to “ensure that effective measures are in place against money laundering/terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currencies activities in Malaysia.”

“A digital currency exchanger must also declare its details to the Bank as a reporting institution,” explains the central bank. “Failure to declare its details as reporting institutions or comply with the reporting obligations may subject the digital currency exchangers to the enforcement and non- compliance actions as provided under the AMLA as well as the potential termination or denial of use of financial services in Malaysia.”

Governor Muhammad Ibrahim said the regulations were to prevent illicit money transmission. While the regulations will only apply to exchanges, “which are being referred to as “reporting institutions,” the securities regulator is looking at creating a framework for cryptocurrencies in general as well. The proposed policy outlines the legal obligations, requirements and standards that digital currency exchangers will need to carry out under the First Schedule of the AMLA. This is expected to include information on the risks expected with the use of digital currencies and the fact that more transparency will be employed to reduce the use of digital currencies for criminal activities. This would include a reporting regimen, a KYC (Know Your Customer) ID protocol and reports on digital currency transactions.

The Bank has pointed out that they do not regulate digital currencies which are not considered legal tender in Malaysia and do not control through licencing, endorsement or validation any of the activities of digital currency exchanges. These are not covered by any financial regulations but would only be covered by standard regulations as a business. This applies to any disputes also. They would not be covered by any financial resolution policies either.

The bank stance is that the public are responsible for their activities in this regard and “Members of the public are advised to carefully evaluate the risks associated with dealings in digital currencies. This includes risks arising from high volatility in prices, the lack of deep markets and vulnerabilities to cyber-attack which can lead to significant losses.

Users of digital currencies will also not be covered under established disputed resolution arrangements which exist for regulated financial institutions in the event of any dispute or losses.” The bank says it will continue to monitor and assess any changes in risks associated with digital currencies to ensure “that the integrity of the financial system is not compromised.”

Further updates will be added as news comes to hand.

This article is for information purposes only and is not to be construed as financial information for any purposes such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.