The Securities Commission Malaysia (SC) is in charge of Malaysian securities regulations. In Jan 2018, the SC together with the Malaysian Central Bank (Bank Negara Malaysia or BNM) published in a statement that “the launching of an ICO, the offering of digital tokens in exchange for digital currency or any form of payment and incidental activities thereof, may trigger regulatory requirements under securities laws. In addition, no person is permitted to carry out any regulated activities such as fundraising, fund management and dealing in capital market products without obtaining necessary approval or authorisation from the SC. Further, ICO operators are prohibited from undertaking regulated activities such as deposit taking and banking business, foreign exchange administration activities and remittances, without the necessary authorisation under financial services laws administered by BNM.” (Source).
In Jan 2018, Malaysia issued a cease and desist order against Copycash, a coin that was preparing an ICO, saying that it contravenes securities laws. (Source).
Which securities laws the token offerings may fall under is still uncertain. Currently, those offering equity products publicly in Malaysia are required to submit a public offering prospectus. Bursa Securities, the Malaysian Stock Exchange, require an uninterrupted profit record of three to five years before listing and at least RM 8 million (US$ 2 million) in profits last year for listing. Also significantly, the company is required to offer at least 30% of securities to ethnic Malay (Bumiputra) investors first when there is demand as part of Malaysia’s Bumiputra policies. Guidelines on the offerings of equity securities in Malaysia may be found here. However, the regulatory landscape for blockchain-based financial instruments is likely to be widely different.
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