Week in Review: Grappling with blockchain in Malaysia as innovators leave

  • Two months for SC & ecosystem players to help create a win-win situation
  • Can Malaysia show it is serious in creating a blockchain ecosystem to operate legally?

IS it a case of too little, too late for Malaysia to be taken as a serious player in blockchain?

While it did not mention anything about blockchain, the recent Securities Commission of Malaysia’s introduction of a regulatory framework around digital currencies is seen as an attempt to bring rules, guidelines, clarity and punishment to the world of blockchain.

The good thing is that meaningful details of the regulation, which go by the decidedly clunky name “Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019”, will only be worked out by end March 2019.

The process of working out the right details for regulations has already brought blockchain ecosystem players and Malaysian regulators together in a meeting this past Friday for each party to hear the other out. I am sure they will be more such engagements in the next two months and hopefully the SC will play a more listening role as at least one participant from the meeting walked away feeling that the SC was coming across as all knowing in this matter as they were regulators.

“There is still an opportunity for Malaysia to be a leader but the SC, if it keeps this attitude could well kill that opportunity,” bemoans the ecosystem player.

And while most parties welcome the attempt to bring some order and clarity to the blockchain world in Malaysia, it should also be noted that quite a number of the early mover Malaysian blockchain players, and I am talking about those already involved in the ecosystem since 2014/2015, grew impatient with the lack of engagement by Malaysian authorities and are now innovating and trying to create their winning blockchain based products and services out of Singapore.   

Jasmine Ng, NEM (New Economy Movement) Malaysia Director of Investments and Strategy acknowledges this reality, noting that impatient blockchain ecosystem players, facing past difficulty in registering and conducting ICOs, coupled with a lack of government support, have indeed bolted overseas.

Yet noting how gullible (or is it greedy) Malaysians are when it comes to chasing easy returns, I personally agree with the SC’s ultra cautious approach in dealing with ICOs.

Meanwhile, despite the lack of clarity from the regulatory front in the past, Malaysian entrepreneur Stephen Chia, was confident that Malaysia could be a major player in the blockchain economy. Hence his involvement together with fellow Malaysian, Lon Wong as founding President in NEM, a global blockchain protocol platform with its own cryptocurrency launched in early 2015, and bringing it to Malaysia in 2017 where its NEM Blockchain Centre operations also act as NEM’s Southeast Asian headquarters.

Sharing Chia’s optimism, Ng too sees an opportunity for a bright future. "If the regulations are done in a way that also helps the blockchain ecosystem grow, it shows that Malaysia is serious about making the country a legitimate place for the blockchain ecosystem to operate legally," she said.

Ng is hopeful that the introduction of clear rules and regulations and support from regulators will help restore the faith of the blockchain ecosystem in Malaysia.

There is still a lot to gain if Malaysia gets it right with its blockchain regulations which include creating rules around cryptocurrencies. There are two months to go before we see what comes out of the SC-blockchain ecosystem consultations. Hopefully both parties can work to create a win-win situation.

If they can’t, Chia notes, “Without a regulatory welcoming environment here, global ecosystem players have other alternatives around the region to establish their blockchain or crypto businesses.”

 

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