In late 2018, Malaysia announced their plans to begin enacting regulation of cryptocurrencies such as Bitcoin, Ripple, and Ethereum. This most recent announcement comes as part of Malaysia’s ongoing project to regulate domestically-based cryptocurrency and to weave them into the economy, hoping to gain a foothold of control over the relatively new currency.
With the international and online nature of cryptocurrencies, as well as the somewhat unstable future they already have, plans and attempts to add regulation will have profound alterations and effects on the market.
Who Regulates What?
Under the new regulations, which went into effect January 15th, all transactions using cryptocurrency will need to be authorized, falling under the jurisdiction of the Malaysian Securities Commission.
Now branded as securities rather than as currency or assets, failure to have them authorized means that usage of them is fully illegal until such authorization is carried out. The punishment for illegal trading and usage of cryptoassets can be a decade of jail time, to say nothing of the extraordinarily expensive fines.
As one might expect, traders are the most affected by the new regulations. Those that have spent time honing skills in dealing with cryptocurrency will still have plenty of room and time to operate. However, it will mean that transactions take longer to occur, seeing as one needs to achieve approval from the central bank of Bank Negara Malaysia.
One can also expect this to have an effect on the value of most cryptocurrencies, especially given the recent crash of prices experienced toward the end of 2018. Seeing as the waiting period and process of achieving approval under the new regulation rules will tamper down on the rapid change the volatile currency often experiences, swift spending and investing will become more difficult.
This could be expected to have impacts on stock markets as well, with hefty effects on the Malaysian economy.
Lim Guan Eng, the Malaysian finance minister, sees a positive outlook for cryptocurrency under new regulations. Cryptocurrency and the blockchain technology used to track and catalog transactions are fully capable of bringing about true innovation across the economy and industry. As legalization was one of the largest hurdles to overcome, the crossing of it and into regulation signals great things for the currency.
Overall, it could be a revolutionary way to handle finances, including fundraising, donating, generating income, and helping the Malaysian economy in general. While the regulations might seem intense, especially when one considers the decade of incarceration an infraction can carry, they are more likely to keep things clear, clean, and concise than to draw back or hurt the popularity of the rapidly growing market of cryptocurrencies.
Ultimately, regulation will likely make cryptocurrency a stronger option for everyone as it’s interwoven into the economy. Drops in prices will be natural, but will just as soon rise again. Cryptocurrency is probable to become just as valid of an option as traditional currency, and regulation is more likely to be helpful in this regard than a hindrance.