Malaysia’s central bank has released new draft rules for cryptocurrency exchanges that function in the country.

The Bank Negara Malaysia disclosed the move regarding cryptocurrency in a release on its website.

It requested the public for opinions on the measures.

The rules were aimed at easing money laundering and terrorist financing issues related to cryptocurrencies.

After months of work in this area, the proposal mandate businesses to verify their customers’ identities.

They must also monitor transactions and report any suspicious activities to Malaysian authorities.

Companies must also report usage statistics to the central bank.

The draft rules say:

“The proposed policy sets out the legal obligations, requirements and standards that digital currency exchangers which will be defined under the First Schedule of the AMLA, must carry out as reporting institutions.

“This includes transparency obligations which are intended to provide relevant information for the public to better understand and evaluate risks associated with the use of digital currencies.

“Increased transparency will also serve to prevent the use of the digital currencies for criminal or unlawful activities.

“A digital currency exchanger must also declare its details to the Bank as a reporting institution.

“Failure to declare its details as reporting institutions or comply with the reporting obligations may subject the digital currency exchangers to the enforcement and non-compliance actions as provided under the AMLA as well as the potential termination or denial of use of financial services in Malaysia.”

If ratified, the regulations would be implemented to any person or company which exchanges cryptocurrency.

Cryptocurrency Not Legal Tender in Malaysia

And while the regulations recognize that companies might use cryptocurrencies, the country does not recognize them as legal tender.

“The public is reminded that digital currencies are not legal tender in Malaysia.

“Accordingly, digital currency businesses are not covered by prudential and market conduct standards or arrangements that are applicable to financial institutions regulated by the Bank.

“This is consistent with reporting obligations currently invoked under the AMLA on other reporting institutions such as legal or accounting firms and real estate agents which do not fall under the Bank’s purview.”

The draft rules continued:

“Members of the public are therefore advised to undertake the necessary due diligence and assessment of the risks involved in dealing in digital currencies or with entities providing services associated with digital currencies.”

The release said that the Bank Negara Malaysia is open for feedback on the draft rules until January 14.

Governor Muhammad Ibrahim explained the regulations last month as tools to curb illicit money transmission.

“This is to prevent the abuse of the system for criminal and unlawful activities and ensuring the stability and integrity of the financial system.”

While the regulations will only apply to exchanges – “which are being referred to as “reporting institutions” – the country’s securities regulator is aiming to establish a framework for cryptocurrencies in general.