Whither Policing Cryptocurrency in Malaysia?

Abstract

Cryptocurrency, like Bitcoin, is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. It is an emerging financial technology enabled by innovation, increasingly popular among global Internet users, and more interestingly, it challenges the existing financial and regulatory rules on the currency and payment systems of the world today. On the other side, certain cryptocurrency like Bitcoin, have been actively used as payment tools for illicit transactions. Both the “promising” and "challenging" faces of cryptocurrency trigger causes for concern for policy makers, not only from financial sector, but also legal and technological sectors. The decentralised nature of cryptocurrency creates unique problems for the government to regulate or impose any regulatory requirements. This article argues that, in order for Malaysia to remain at the forefront of financial and digital innovation, it is timely to look at the question on whether to formulate certain policy and regulatory framework on the use of cryptocurrency in Malaysian market. The answer can pave the way for Malaysian digital citizens to potentially grab the opportunities made possible by the cryptocurrency technology. For this purpose, the researchers seek to study the features of cryptocurrency and the experiences from policymakers in other jurisdictions in dealing with the matter.

Bitcoins in the Malaysian Economy

“…Since Bitcoin is an open payment system, it can also provide people in developing countries with global access to cheap financial services. It could relieve people in countries with tight capital controls (Zulhuda & binti Sayuti, 2017). The amount of bitcoin that can be mined is limited and can not be tampered with to 21 million.…”

“…Cyberspace becomes the managing agency that handles these disruptive markets and maintains them. The cost (along with other properties) of almost zero transactions has made these currencies even higher than the traditional money (Zulhuda & binti Sayuti, 2017). Therefore, it can indeed be said is that they are only the beginning, and there are endless possibilities.…”

Cryptocurrency Acceptance: A Case of Malaysia

“…Bitcoin is the first and most wellknown cryptocurrency which was introduced by Satoshi Nakamoto in 2008 [15]. Despite the rising popularity of Bitcoin with its spiking growth in value, it remains controversial if cryptocurrency should be gaining legitimacy for business transactions and investment [4]. The lack of a standard global regulatory framework for this emerging FinTech innovation had caused many people to take advantage of its decentralized nature for illegal purposes such as money laundering, illicit trade for weapons and drugs as well as financing terrorism [4].…”

“…Nevertheless, the decentralized and anonymous nature of cryptocurrency has reduced governments" control in preventing cryptocurrency usage for illicit transactions. Along the years, laws and regulations relating to cryptocurrency frequently updated in many countries as technology evolves and cryptocurrency acceptance increases [4]. Up to 2018, Malaysia"s position remains ambiguity as cryptocurrency is neither banned nor accepted as legal tender.…”

Cryptocurrency Adoption in Malaysia: Does Age, Income and Education Level Matter?

“…Despite the significant growth of cryptocurrency trend over the years, the global regulators embrace different attitudes and standpoints towards acceptingcryptocurrency as a legal tender in payments for goods and services. Such heated controversy could be attributed to the use of cryptocurrencies as a means for illicit transactions, for instance, money laundering as well as trade for drugsand weapons [17,18]. In comparison with other countries'stern stance towards cryptocurrencies such as China, Malaysia regulators have relatively favorable and positive attitude towards the advent of cryptocurrencies.…”