The Malaysian government has yet to release its regulations for the cryptocurrency industry, but plans to enforce these as soon as the first quarter of next year.
Finance Minister Lim Guan Eng said that he had been informed by the country’s Securities Commission (SC) that it would use the new regulations to help provide fundraising to companies via alternative means.
He said, “We are keen on the continued development of such alternative financing avenues for these businesses beyond the traditional channels of financing,” according to local outlet The Star. He was speaking at a conference organized by the SC.
Lim noted persistent skepticism about the industry, but said, “[T]here can be no doubt that we need appropriate regulations to be put in place and enforced to safeguard the interest of investors.”
The regulations would cover not just initial coin offerings (ICOs), wherein numerous scams such as Ponzi schemes are prevalent, but cryptocurrency exchanges, which elsewhere in the world have been targets of thefts by hacking.
According to Lim, the proposed legislation will have the SC and the Bank Negara Malaysia, the country’s central bank, forming part of a committee headed by the Finance Ministry.
Already, the government has budgeted a Co-Investment Fund for MYR50 million ($11.9 million) involving equity crowdfunding and peer-to-peer financing, which appear compatible with blockchain and cryptocurrency firms. The fund will have the government matching one-fourth of private investors’ contributions.
The SC has long been considering a regulatory framework that would adequately guide growth of the local industry. Late last year, the drafting of rules was being discussed. Shortly before this, some officials had seemed less inclined to even allow blockchain businesses in the country, suggesting an outright ban.
Last September, the government formed a task force, the Malaysian Industry-Government Group for High Technology (MIGHT), to look into adopting blockchain for the country’s major industries, namely renewable energy, palm oil, and Islamic finance.
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The Malaysian government is seeking to utilize blockchain to increase transparency, sustainability and logistical efficiency of its three largest industries—renewable energy, palm oil, and Islamic finance.
According to reports, the government has appointed a task force named the Malaysian Industry-Government Group for High Technology (MIGHT) to oversee the blockchain adoption. Mastura Ishak, program director at MIGHT, told GovInsider: “Blockchain is interesting because it allows small players to have a say about what’s going on.”
The Malaysian government believes that adopting blockchain in the renewable energy industry will help bring new players to the table and increase energy production in the country. Currently, Tenaga Nasional Berhad (TNB) is the only utility provider in the country.
The new project will allow private solar panel owners to sell any excess electricity they have. In the new system, electricity sellers will be required to state how they are generating their electricity, while consumers will have the choice of deciding which sources of electricity they would like to use.
By allowing private solar panel owners to sell their surplus electricity, the country will also save up on the electricity lost during long-distance distribution.
For the palm oil industry, the Malaysian government hopes blockchain will help bring major changes that will improve the country’s economy. Palm oil is Malaysia’s biggest export, accounting for about 43.1% of the country’s agricultural income.
Palm oil has been facing problems for quite some time now. This happened after reports emerged associating the industry with bad practices and child labor. MIGHT believes blockchain adoption can help identify certified palm oil operations which will help eliminate illegal operations. The government will also be able to monitor and regulate the operations.
Finally, there’s Islamic finance. Islamic laws state that money has to be based on real commodity and cannot be created from more money. The strict nature of Islamic laws have caused high overhead costs on the industry, which is reflected in the country’s economy. The government is looking at how they can offset these costs while also adhering to Sharia laws. Blockchain and the adoption of smart contracts could help offset some of these costs.
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