Malaysian MP ”Concerned About Threat” from Cryptocurrencies to Government Money

Economy & Regulation

Lim Guan Eng, the finance minister of Malaysia, has warned individuals and companies planning to issue new cryptocurrencies with a stern: “don’t do it”. Addressing parliament on Nov. 26, Guan Eng advised to wait for legal guidance from Bank Negara Malaysia, the southeast Asian country’s central bank.

Also read: Law Firm: South Africa’s Draft Law Could Affect Cryptocurrency Use

 Wait for Central Bank Guidance

“Don’t do it without Bank Negara’s guidelines or directive on the matter to avoid doing something wrong and against the law,” Guan told parliament on Monday. He was responding to a legislator who wanted to know what government was doing to prevent cryptocurrencies from allegedly causing “problems” for the local fiat unit, the ringgit.

Malaysian MP ”Concerned About Threat” from Cryptocurrencies to Government Money

One of the more common ways to create a new virtual currency is through fund-raising models such Initial Coin Offerings (ICOs). It might be that the Malaysia finance minister was speaking with that in mind, especially considering how a number of ICOs throughout the world have shipwrecked, turning out to be nothing more than just elaborate scams.

“We need to be cautious as Bank Negara is the authority that handles and manages all forms of new currency technology,” online newspaper The Star Online quoted Guan as saying. The finance minister said government was open to emerging forms of money such as virtual currency but only if they adhere to the law.

Bitcoin and other digital currencies are not recognized as legal tender in Malaysia, but they aren’t banned either. That means individuals or companies trading cryptocurrency are free to do so, but are not protected by law. However, under the legislation governing money laundering, all crypto asset exchanges operating in Malaysia are subject to its reporting obligations.

Ringgit Under Threat?

Malaysian MP ”Concerned About Threat” from Cryptocurrencies to Government Money

Earlier, Datin Paduka Dr Tan Yee Kew, a member of parliament (MP), asked the finance minister whether government would establish a statutory body for the regulation of the digital asset industry in Malaysia. The MP was particularly concerned about the threat posed by cryptocurrency on the normal functioning of the ringgit.

In response, Guan Eng stated:

I am certain that there are those trying to introduce their own mechanism. This is where I wish to advise all parties, no matter who they are, intending to issue bitcoins or cryptocurrency, that they must refer to Bank Negara which is the authority that will have the final say on this new form of currency.

During the same parliamentary session, an MP demanded explanation over the “harapan coin”, alleging it had clandestinely raised money without approval from the Malaysia central bank.

“Although it is a new initiative and has yet to get approval, it was reported that the coin is being traded at $45 for 100 units and has since collected $772,” charged the MP.

The harapan coin is an initiative of Khalid Samad, the country’s Federal Territories Minister, who is aiming to use the token to raise political funding for Malaysia’s ruling party, Pakatan Harapan, in preparation for the 2019 general elections. Samad said he had submitted documents of the harapan coin to Bank Negara for approval.

What do you think about the Malaysian finance minister’s position on cryptocurrency? Let us know in the comments section below.

Images courtesy of Shutterstock.

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