When Bitcoin (BTC) took a firm hold on the imagination of the general public, the idea was entrenched as a means to seize the control of personal, financial assets away from centralized authorities.
Decentralized, anonymized trading on the blockchain — also known as distributed ledger technologies — was touted as a means to keep a central group, such as a bank or corrupt government, from controlling the exchange of assets which had financial worth.
From BTC sprung other virtual coins and tokens, blockchains forked, and startups jumped on distributed ledgers to create new financial products away from traditional, financial institutions.
However, it was only a matter of time before the rejected, traditional institution took note and began offering their own product lines and services based on similar precepts.
Regulators the world over are still treating virtual currencies with caution; some pursuing taxation, while others have banned trading entirely. Now, in Malaysia, cryptocurrency exchanges have been handed over to the control of the country’s central bank.
As reported by local publication the New Straits Times, cryptocurrencies introduced in the country will have to pass through Bank Negara Malaysia (BNM) before being introduced to the public.
According to the country’s finance minister Lim Guan Eng, the Malaysian government and the BNM “must be careful” as the ramifications of cryptocurrencies on traditional, financial systems are yet to be fully researched and understood.
“I advise all parties wishing to introduce Bitcoin (style) cryptocurrency to refer first to Bank Negara Malaysia as it is the authority that will issue the decision on financial mechanism,” Guan Eng said. “Do not try to do something without guidelines from Bank Negara and commit something against the law.”
The finance minister added that the government is not attempting to obstruct the use of cryptocurrency but it must be used in relation to existing laws.
At the same time, the sale of Harapan Coins — touted as tokens being sold for “the purpose of eliciting opposing sentiments against the current governing coalition, in preparation for the coming election,” is underway. Local media suggests the token has not received approval from BNM, and so the sales may be deemed illegal.
There is irony in the concept of a central authority taking over the regulation of a decentralized framework, and with the exception of holding to account exchanges based firmly in Malaysia, it is not clear how the government intends to police the industry.
The cryptocurrency market is in constant flux, and as such, maintaining control and authority over trading will likely be difficult. Speaking to ZDNet, Steve Giguere, lead EMEA engineer at Synopsys’ Software Integrity Group, previously told us on the topic:
“The bottom line is that, although governments need to put in place efficient regulations that prevent investors getting into difficult situations, the way such regulations are drafted will largely depend on their view of crypto as a useful financial innovation rather than a threat.”
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In this country, your cryptocurrency must go through your bank
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