SC green light for 22 digital asset exchanges after March 1

PETALING JAYA: Only 22 out of 43 digital asset exchanges are permitted to continue their operations in after March 1 following a review by the Securities Commission (SC).

The regulator said in a statement today the 22 digital asset exchanges may continue their operations for a transitional period after March 1 until such period as may be notified by the SC.

“During the transitional period, these platform operators will not be permitted to accept new investors and will only be allowed to facilitate the withdrawal or transfer of client assets with the written instruction of the investor,” it said.

According to the SC, companies which do not submit their application to the SC by March 1 are required to take necessary steps to cease their business and return all clients’ assets by March 15.

The remaining 21 digital asset exchanges that have been removed from the list are not allowed to continue operations after March 1.

“Members of the public should also take note that this notice does not constitute an approval, authorisation or endorsement by the SC of any digital asset platform opera-tors or any digital assets traded on the platforms,” said the regulator.

The SC said the list will be updated regularly and encouraged members of the public to refer to the list when dealing with digital asset exchanges.

The list was updated following the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 that took effect on Jan 15, 2019, following which the SC received numerous queries on the implementation of the order.

The SC subsequently invited and engaged with existing digital asset platform operators and made arrangements to facilitate the operations of these platforms for a transitional period until March 1, 2019, subject to them fulfilling the conditions specified by the SC.

Existing platform operators are required to apply to the SC for authorisation if they intend to operate beyond the transitional period.

Prospective operators can also apply to the SC for authorisation and the SC will evaluate all applications and authorise market operators that fulfil the relevant requirements.

Last December, the SC announced that it will regulate issuances of digital assets via initial coin offerings (ICO) and the trading of digital assets at digital asset exchanges in Malaysia.

However, the reiterated that digital assets, which refer to digital cur-rencies and digital tokens, are not legal tender in Malaysia and advised the public to carefully evaluate the risks associated with dealings in digital assets.

Separately, the SC today published two consultation papers to seek public feedback on the framework for ICOs and property crowdfunding.

An ICO is an alternative fundraising avenue that leverages on distributed ledger technology, including blockchain. It involves the issuance of digital tokens by an issuer who wishes to raise funds for a project or venture.

The consultation paper discusses the proposed framework for, among others, the eligibility of issuers, the need for transparent and adequate disclosures as well as utilisation of proceeds of the ICO.

The second consultation paper on the property crowdfunding framework follows on from Budget 2019, which identified crowdfunding platforms as an avenue to provide an alternative funding source for first-time homebuyers while providing investors access to a new asset class.

The SC is seeking public feedback on the proposed regulatory framework which will, among others, set the eligibility requirements of first-time home buyers, criteria of properties which can be listed on the platform, obligations of platform operators and financing limits.

Source: The Sun Daily

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