SC Malaysia Includes Digital Assets in ‘Recognised Market’

Operators of electronic platforms for digital assets have until 1 March to submit an application to be formally recognised by the Securities Commission as market operators.

Malaysia's SC (Securities Commission) has issued revised guidelines on recognised markets to include new requirements for operators of electronic platforms facilitating trade in digital assets.

Any parties in Malaysia intending to operate a platform for digital assets will now have to submit an application to the SC to be formally recognised as a market operator, in compliance with the revised guidelines, which introduce new requirements to safeguard investors in digital assets.

“The new framework is part of the SC's efforts to promote innovation while ensuring investor protection in the trading of digital assets,” said SC chairman Datuk Syed Zaid Albar.

The amended guidelines follow the coming into force of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 on 15 January 2019, which effectively prescribed cryptocurrencies and digital tokens as securities and granted oversight power of such digital assets to the SC.

During a transitional period, the SC had said platform operators were prohibited from accepting new clients and ongoing ICO projects required to return all client funds, until the regulator was ready to formally authorise their activities.

Applicants, including platforms operating under the transitional arrangement, will now have until 1 March 2019 to submit an application to the SC.

Under the guidelines, operators must be a locally-incorporated company with a minimum paid-up capital of MYR 5 million (USD 1.22 million) and must be able to demonstrate a clear or unique value proposition, or how they will contribute to the overall development of the capital market.

They must also have appropriate security arrangements, which include maintaining a secured environment pursuant to the SC's cyber risk management and other relevant guidelines.