Malaysia Announces Digital Asset Guidelines

The Securities Commission Malaysia has published the country’s guidelines on digital assets which set out the regulatory framework for token sales. All token offerings must now be carried out only through platforms approved by the commission. The guidelines also detail the obligations of approved platforms as well as the requirements token issuers must meet.

Also read: Regulatory Roundup: EU-Wide Crypto Regulations, New Rules in Europe, US, Asia

New Digital Asset Guidelines

The Securities Commission Malaysia (SC) announced on Wednesday that it has released the Guidelines on Digital Assets pursuant to section 377 of the Capital Markets and Services Act 2007. The commission explained that the guidelines incorporate feedback it received after issuing the consultation paper on the subject, adding:

The guidelines set out the requirements for all offerings of digital tokens to be carried out through an initial exchange offering (IEO) platform operator that is registered with the SC.

These platform operators must seek authorization from the commission and have a minimum paid-up capital of 5,000,000 ringgits ($1.23 million). Among other requirements, they must carry out the necessary assessment and due diligence to verify the compliance of the issuer, its board, and the token to be offered, the announcement details.

Implementing the New Rules

The guidelines also set out the requirements for anyone seeking to raise funds through token offerings. A prospective issuer must satisfy governance and capital requirements to be eligible to raise funds using this method. It must be a company incorporated and have its main business in Malaysia, with a minimum paid-up capital of 500,000 ringgits. “Issuers are required to demonstrate that their proposed project or business provides an innovative solution or a meaningful digital value proposition for Malaysia,” the commission further stated, noting:

An issuer may raise funds up to a ceiling of RM100 million and tap on investments from retail, sophisticated as well as angel investors, subject to the investment limits provided in the guidelines.

An offering must be accompanied by a whitepaper furnished to the commission and approved by an approved IEO platform. The whitepaper must contain material information on the issuer, the token, and how the funds are to be used. The commission explained that it will conduct “post issuance monitoring of the utilisation of the proceeds” after the offering has been completed, elaborating:

The guidelines will be brought into force in the second half of 2020 to allow potential issuers, platform operators and investors to familiarise themselves with the requirements in the guidelines … until the coming into force of the guidelines, no person is permitted to offer or issue any digital tokens in Malaysia.

The commission will work with relevant platform operators in assessing eligible issuers during the first phase of implementation of these guidelines. It is accepting feedback on the regulatory framework until May 15. Malaysia is already regulating the crypto sector and has approved several crypto exchange registrations.

What do you think of Malaysia’s guidelines for token sales? Let us know in the comments section below.

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