Malaysian PM discusses possible crypto regulatory framework with Binance CZ founder and UAE officials

Key Takeaways

Malaysian PM discussed establishment of crypto regulatory frameworks with Binance and UAE officials.
The initiative aims to modernize Malaysia's financial system and includes comprehensive audits by authorities.

Malaysian Prime Minister Datuk Seri Anwar Ibrahim recently met with Binance founder Changpeng Zhao and UAE officials to discuss possible crypto regulatory frameworks, the New Straits Times reported Tuesday.

The talks, which took place during Anwar's three-day official visit to Abu Dhabi, centered on the establishment of policies that could recognize the crypto industry and modernize Malaysia's financial system.

“I had long discussions with the leadership of Abu Dhabi and Changpeng Zhao, the co-founder of the world's largest cryptocurrency platform, Binance,” Anwar said, adding that he has urged the central bank and Department the Finance to investigate digital finance so that it is not left behind and protect the public interest.

“This is an evolution that happens quickly and we need to be just as quick. We feel that Malaysia should not be left behind while it is mired in an old financial system,” said the PM.

The PM said the campaign would mark “a big departure from the old ways.” UAE policymakers expressed their willingness to cooperate with Malaysia in developing their crypto regulatory approach.

“We need to discuss this in detail, leave the old business model and give meaning to this digital financial policy,” said Anwar.

Malaysian authorities, including the Department of Finance, the Securities Commission, and Bank Negara Malaysia will conduct detailed investigations before implementing a policy, according to the PM. He also noted potential concerns and the need to train staff and develop capacity in this area.

The state of digital assets in Malaysia

In Malaysia, the ringgit remains the only legal tender. Although not recognized as a legal tender, digital assets are finding a place within the existing financial framework. They are classified as securities under the Capital Markets and Services Ordinance, bringing with them subject to Malaysian financial regulations.

Oversight of cryptocurrencies is shared between Bank Negara Malaysia and the Securities Commission. The central bank handles general crypto issues, while the securities regulator regulates digital currencies classified as securities.

In June last year, the Inland Revenue Board launched “Ops Token” to deal with tax evasion related to crypto trading, raiding over 10 locations in the Klang Valley. The IRB reported that they found crypto transaction data on devices, leading to identify a significant reduction in tax revenue.

In addition to tax concerns, authorities have has been fighting illegal cryptocurrency mining operations that rely on stolen electricity. Estimates from the Deputy Minister of Energy put the cost of this illegal activity at approximately $723 million in stolen electricity between 2018 and 2023.

Despite efforts to regulate crypto assets, experts note that the Malaysian legal framework still lacks transparency and consistency. There are calls for more comprehensive legislation specifically tailored to digital assets.