PETALING JAYA: A cryptocurrency expert is urging collaboration between government agencies and international bodies to strengthen regulatory oversight of the digital asset industry.
The call comes amid a surge in financial fraud and cybercrime linked to cryptocurrencies.
Vincent Fong, chief editor of Fintech News Malaysia, acknowledged that Malaysia was among the early movers in developing regulatory frameworks for cryptocurrency but said the country was now lagging behind its counterparts in several key areas.
He said that markets like Singapore and Hong Kong have already issued clear guidelines on stablecoin — a type of cryptocurrency.
“Like any financial crime, crypto crimes are something that require interagency and intergovernmental cooperation to tackle (the issue),” he told FMT.
Regulations on cryptocurrency in Malaysia currently fall under the Securities Commission, particularly the Capital Markets and Services (Prescription of Securities) Order 2019.
As it stands, cryptocurrency is not recognised as legal tender in Malaysia. Instead, it is treated as a form of security, akin to stocks. Issuers of digital assets must first obtain authorisation from the Securities Commission by meeting the conditions outlined in the Digital Asset (DA) Guidelines.
Last year, Bernama quoted the Malaysia Cyber Consumer Association as saying that over 4,000 fraud cases tied to cryptocurrency were reported in Malaysia within the past five years, with total losses exceeding RM200 million.
It also quoted Dr Nadisah Zakaria, an assistant professor at the finance department at Prince Sultan University, in Saudi Arabia as saying that while Bank Negara Malaysia has issued guidelines on cryptocurrency usage, the lack of comprehensive regulations may lead to misuse, fraud or instability in the market.
Earlier this week, it was reported that Singapore ramped up crypto exchange regulations in a bid to curb money laundering and boost market confidence after a series of high-profile scandals rattled the sector.
Fong called for joint educational efforts to protect consumers from investment scams, citing initiatives like the #JanganKenaScam campaign jointly organised by several local banks as a model for effective public awareness.
Similarly, Redza Arbee, the former head of digital adoption at Khazanah Nasional Bhd, suggested modelling regulations after existing international frameworks.
One such example is the Genius Act — recently passed by the US Senate — that regulates stablecoin, which has in the last two years overtaken bitcoin as the preferred cryptocurrency of cybercriminals.
“With clear regulation, we can help the public understand all the nuances of cryptocurrency.
“Otherwise, it’d be like opening up a casino without helping people understand what’s at stake,” said Redza, author of a book titled “The Digital Transformation of Money”.
Lawyer Agalya J Munusamy called for the authorities to cooperate with cryptocurrency issuers on improvements to existing regulations, instead of banning digital assets outright.
In 2022, then deputy finance minister I, Shahar Abdullah said the country had no intention of recognising cryptocurrencies as legal tender, due to the volatility of digital currencies and the risks from hackers, among others.
Agalya however said the government should recognise the fact that “you can’t stop someone from going into cryptocurrency”.
“Just because they’re banned, it doesn’t mean that people can’t find other ways to use them anymore.
“I think what’s more important is to have round table discussions between both parties, and see how you can improve regulations. Meet in the middle.”
