“digital token” means a digital representation which is recorded on a distributed digital ledger whether cryptographically-secured or otherwise

BNM's role as the overseer of payment systems is to ensure the safety, reliability, and efficiency of payment systems and instruments. Privately-issued digital assets such as cryptocurrencies are suitable as a general payment instrument as they exhibit the universal characteristics of money. They do not face any limitations, such as price volatility and vulnerability to cyber threats.

Digital assets are not a payment instrument that is regulated by BNM and does not constitute money that is legally accepted for the exchange of goods and services (not a legal tender) in Malaysia.

However, digital assets do have multiple use cases, including as an investible class of assets. As the regulator of the capital market in Malaysia, the SC has prescribed digital assets as securities under its laws. Pursuant to this, digital assets can be issued by a company for the purposes of raising funds subject to the issuer fulfilling the conditions set by the SC.

The invocation of reporting obligations on digital currency exchange business by Bank Negara Malaysia in

2018 connoted the authorisation, licensing, endorsement or validation by the Bank of any entities involved in the provision of digital currency exchange services.

Bitcoin, Ether, Ripple and Litecoin are among the famous type of

cryptocurrencies

The following are the Digital Asset Exchanges licensed by the Securities Commission Malaysia.

i. Luno Malaysia Sdn Bhd

ii. SINEGY Technologies (M) Sdn. Bhd.

iii. Tokenize Technology (M) Sdn. Bhd.

iv. AES Signatum Berhad

v. Arbor Digital Sdn. Bhd.

vi. Belfrics Malaysia Sdn. Bhd.

vii. BLOKMY Sdn. Bhd.

An initial coin offering (ICO) is the cryptocurrency industry’s equivalent to an initial public offering (IPO).

ICO scheme operators typically raise funds through the issuance and sale of digital tokens, in exchange for investors paying for these tokens through virtual currencies, such as Bitcoin or Ethereum.

Advantage and benefits of initial coin offering (ICO)

i. Scheme operators may not have presence in Malaysia and it would be difficult to verify the authenticity of the scheme and the recovery of invested monies may be subject to foreign laws or regulations

ii. Some ICO schemes and the parties involved operate online and may not be regulated, investors may be exposed to heightened risks of fraud, money laundering and terrorism financing

iii. Digital tokens traded on a secondary market may give rise to risks of insufficient liquidity or volatile and opaque pricing

iv. The structure of these ICO schemes might limit the legal protection and recourse for investors against scheme operators