Stay or exit by March 1, SC tells digital asset operators

KUALA LUMPUR: Digital asset operators can exit the Malaysian market during the transitional period till March 1 if they think their business is not viable here, said the Securities Commission Malaysia’s (SC) executive director of innovation, digital and strategy, Chin Wei Min.

The SC, which was tasked with regulating digital assets, has prohibited digital asset platforms from accepting new investors during the transitional period until March 1 and no person can conduct any initial coin offering (ICO) activity without prior authorisation.

Chin said this transitional period allows digital asset operators to think about the feasibility of their business in Malaysia, and whether they want to continue or exit.

“They can also wind down their business and if they decide not to continue, they should return the money and assets to their respective investors,“ he told a media briefing here today.

Chin said there are many digital asset exchanges operating in Malaysia and in a week it has identified those exchanges not on the reporting institutions’ (RI) list.

“The RI list has more than 47, this is public information, you can add on a few more.”

“We have more than 50,000 active accounts (in exchanges) in Malaysia. Suffice to say, there are many investors out there,“ he added.

Chin stressed that existing platform operators have until Friday to identify themselves to the SC, beyond which the regulator reserves the right to take action.

He said guidelines for digital assets, including those for ICOs and digital asset exchanges, are expected to be launched by the end of March.

However, Chin disclosed that the ICO guidelines will be geared towards a disclosure regime.

Any person offering an ICO or operating a digital asset exchange without the SC’s approval may be punished, on conviction, with imprisonment not exceeding 10 years and fine not exceeding RM10 million.

Chin said digital assets are prescribed as securities only if they meet or fulfil characteristics of securities.

“It is not blanket ‘everything is securities’. The reality is you need to show that you are using the token as fundraising … and there are several characteristics. The other is, when you buy, sell or exchange, if you expect a return, then it falls under the definition of securities.”

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