Government officials for developed countries have had major problems when having to adjust to the reality of cryptocurrencies in the past few years. Countries with developing economies, however, tend to be more fragile, sensitive to change, and have overreacted on many occasions. China has banned cryptocurrencies. India has what amounts to a “quasi-ban” since its central bank forbid all banks from servicing bank account transactions for any crypto related businesses. The latest news is that officials in Malaysia cannot decide if cryptos are legal or illegal. Are they legal tender or forbidden?
The central bank of Malaysia has yet to weigh in on the subject, but in November last year, Lim Guan Eng, the Minister of Finance, issued a warning to all companies that might be considering issuing a new token: “Don’t do it without Bank Negara’s guidelines or directive on the matter to avoid doing something wrong and against the law.” Under pressure, the central bank soon issued a statement: “Legislation on cryptocurrencies and initial coin offerings was being put in place.” No specific date was given.
The issue had become murkier after it became known that Khalid Abdul Samad, Malaysia’s Federal Territories Minister, had gotten involved with a local proposed Initial Coin Offering (ICO). The new token was to be the “harapan” coin, a device for raising political contributions for the 2019 elections for the ruling political party, Pakatan Harapan. Bank Negara, the Malaysian central bank, did not give its approval.
Due to his involvement in the “harapan” ICO, people have sought out Samad’s opinion as to whether an approval of cryptocurrencies was imminent. Samad’s reaction has been:
Yes, I was involved in the launch of harapan coin. However, I was not appointed as finance minister. Instead, I became federal territories minister. As the matter is not under my jurisdiction, I cannot push too much. At the moment, the answer is neither legal nor illegal as the situation is still unclear.
Malaysia is one of the most prosperous economies in Asia. A burgeoning middle class has new wealth to invest, and cryptocurrencies have been hyped in this part of the world, as well. Government officials, however, have been opposed for similar reasons as have been cited by Chinese officials in the past. Their major concern is that cryptocurrencies might unduly influence the underpinnings of the domestic fiat currency, in this case, the Malaysian Ringgit.
When Lim Guan Eng, the Finance Minister, issued his warning in December, he did add that the Malaysian government was not opposed to “new forms of virtual money”, but any form of cryptocurrency must be in compliance with local law. The harapan coin did proceed without approval from the central bank and has raised funds. Objections have been raised by at least one Member of Parliament to date.