New regulations on Bitcoin and digital currency from Malaysia’s central bank probably won’t “ban” their use. According to reports, they’re more likely to introduce identity and reporting rules for exchanges similar to banks and other financial companies.
Malaysia is considered an “emerging economy” and its largest city Kuala Lumpur an up-and-coming financial services center — making any regulatory action on cryptocurrencies noteworthy.
It’s located centrally in Asia and neighbors financial powerhouse Singapore. Blending financial expertise with the country’s large Muslim population has also made Malaysia a world leader in alternatives like Islamic finance.
Bank Negara Malaysia announced in September it would announce new regulations covering digital currencies before the end of 2017.
However, uncertainty surrounding exactly what BNM will do has produced some exaggerated responses. Comments like “Bitcoin is illegal in Malaysia” and headlines like “Malaysia is considering a cryptocurrency ban” have circulated widely on social media.
— Kanad Bandyopadhyay (@BKanad) October 6, 2017
Malaysia Keeping Its Options Open
Saying it’s “considering” a ban is technically correct — however it’s just one possible option, in that way all options are possible in a brainstorming session. Ibrahim himself simply wouldn’t rule it out when pressed by reporters, as you’d probably expect.
Others took a more optimistic view, noting that it’s equally a potential legalization.
Regulation is a double-edged sword in cryptocurrency. It cracks down on the so-called anonymity and “black economy” uses that has provided several unique use-cases, but the institutional “legitimacy” it bestows attracts more investment, making the assets more fiat-valuable.
Debate will continue to rage over what would give bitcoin and other digital assets more value long-term — complete freedom or regulated use.
(There are also plenty of investors who consider rises in their fiat value more important than utility, but that’s another can of worms.)
Local Malaysian Bitcoiners Say Regulation Will Be ‘Constructive’
Malaysian Bitcoin entrepreneur Colbert Low — founder of Celebrus Advisory and BitcoinMalaysia.com told Bitsonline he expects the new regulations to be “constructive for the industry”. BNM has had a strong international reputation for being a steady hand in the past three decades, he said.
“We expect the BNM to integrate blockchain-based digital currencies into the financial system, which requires a measured approach. This is aligned with the central bank’s roadmap for e-payment to displace cash, greater financial inclusion for the unbanked masses, and using compliance as a means to an end in a complex financial environment.”
Low noted that Malaysia is considered one of two “breakout nations” with the fastest rate of digital evolution, alongside China. Hence Malaysian Bitcoiners believe the general intent “is not to hamstring innovation and competitiveness with a hardline prescription-based approach, but to work with industry partners and participants to achieve outcomes.”
You cannot really regulate something unless you first bring it out in the open and set parameters, he added.
How Have Countries Regulated Bitcoin Around the World?
Despite a few scattered threats from around the world over the years, no country has ever successfully “banned” Bitcoin. Their efforts to do were ultimately either halfhearted (Ecuador, Iceland, Vietnam) or found to be too difficult (Russia).
What countries like China have been successful at, however, is restricting the use of bitcoin. China knows banning cryptocurrencies outright would be futile, so has focused instead on making them less accessible or useful. Even so, it seems more concerned over the free-for-all of ICO trading than “old-school” cryptocurrencies like bitcoin and litecoin.
In most cases (e.g.: Japan and Australia) digital currency regulation has aimed more at potential money laundering, tax evasion, and other crimes. So far they have involved greater KYC/AML (know-your-customer/anti-money laundering) requirements for opening new accounts, suspicious transaction reporting, and some “consumer protections”.
Unless anything drastic happens in the next few months, it’s likely Malaysia’s solution will be similar to those last two.
Does regulation ultimately help or hinder Bitcoin? Let’s hear your thoughts.
Images via Pixabay, YouTube