Bitcoin Cryptocurrency

 

During a keynote speech at the 2018 SCxSC FinTech Conference, Malaysia's finance minister Lim Guan Eng announced that the country would be implementing regulations for cryptocurrency exchanges and initial coin offerings by the first quarter of 2019.

The move would bring Malaysia into alignment with a wave of other major players like Japan and Malta that have sought to bring attentive regulation to the cryptocurrency space. Still, it is unlikely that one of the major players in this space— the U.S—will  follow in the footsteps of Asia or Europe any time soon.

“I think that for good and bad, our financial markets, our financial regulation and our financial regulators are much more inward looking then outward looking,” said Timothy Spangler, a partner in the financial services group at Dechert.

Per Lim's remarks at FinTech, regulations are being put in place to “safeguard the interest of investors,” and are part of an ongoing effort by Malaysia's Securities Commission to create alternative fundraising paths and foster more investment asset classes.

The announcement shouldn't come as too big a surprise. According to Spangler, Malaysia has consistently demonstrated a willingness to innovate within different areas of finance over the last several decades. He pointed specifically to sectors like Islamic finance or Sharia-compliant financing, practices that could find some “unique synergies” in the blockchain or cryptocurrency spaces.

“And that's something that no one is really talking about, the intersection between blockchain and Islamic finance, so I could see there being a very, very important ground that Malaysia could occupy and serve as a real leader there,” Spangler said.

Lim didn't go into specifics at the FinTech conference about what Malaysia's cryptocurrency regulations could wind up looking like, other than that investors will be working within a framework established by the Bank Negara Malaysia and the Securities Commission under the auspices of the country's Finance Ministry.

This intention to regulate is still a step further than other countries like the United States are presently willing to go—and peer pressure from neighbors in the east isn't likely to win out any time soon. Spangler expects to continue to see slow but steady progress from American regulators when it comes to cryptocurrency and blockchain.

“I just don't see that either the government or Congress or any of the regulators will kind of a adopt a wholesale revision of any of the financial regulation to provide clarity,” Spangler said.

Foot dragging aside, it may be a question of “when” not “if” other countries will eventually be forced to catch up to Malaysia and other burgeoning cryptocurrency exchanges. Technology is developing quickly, and turning an eternal blind eye doesn't seem to be a viable option.

Spangler drew parallels to the emergence of the Internet during the 1990's.

“It started slowly and eventually the regime accommodated, but it took time and I think that eventually that's what we'll see here. No one can really just wish blockchain out of existence,” Spangler said.