Updates on the legality of cryptocurrency in Malaysia & Other Jurisdictions

The Malaysian position

On 19 September 2017, the Governor of Bank Negara Malaysia (“BNM”) announced at the Global Symposium on Development Financial Institutions that there will be a a guideline on cryptocurrency to be issued by year end.

It appears that the BNM is particularly concerned about the transparency and the players involved in the cryptocurrency scheme. The detailed news report can be read here.

Two weeks after that, Securities Commission (“SC”) issued a statement on Initial Coin Offering (ICO). In summary, the SC gave a stern warning to investors to be mindful of the potential risks involved in ICOs scheme.  The full statement can be read here.

In restrospect, BNM had earlier announced 3 years ago that Bitcoin is not recognised as legal tender and it does not regulate the operations of Bitcoin. The announcement can be found here.

The potential ban of cryptocurrency by BNM would indirectly mean that ICO would also be deemed to be illegal. This will include the act of buying and selling of other form of cryptocurrency such as Bitcoin and Ethereum altogether.

Potential investors and companies seeking to raise funds through ICOs are advised to be careful when dealing with cryptocurrency given the speculative nature of the schemes.

It was reported recently that Malaysian-based HelloGold, which closed a Series A round at a post-money valuation of $12 million (backed by various investors, including Malaysian investor, Dani Sdn Bhd), is raising funds through an ongoing initial coin offering (ICO).The token sale proceeds will be used to finalise the development of the Gold Backed Tokens using Ethereum ERC20 taken, as well as developing ‘ethereum smart contract’ based gold financial products. HelloGold’s live mobile app lets customers to buy and sell physical investment grade gold for a minimum price of RM1.00, as well as permits them to use the gold as collateral for affordable loans and to transfer their gold to others at no additional cost. Read more here

Comparative Jurisdictions 

The following table sets out briefly the legal positions of cryptocurrencies in a number of jurisdictions globally. Whilst some countries are proactively taking measures to accommodate the development of crypocurrencies (such as Singapore), most other countries have not taken any clear and affirmative position on its legality and await response from investors and industry players.

Cryptocurrencies: Legal Position Worldwide


Just as how we have seen the Bank Negara Malaysia and Securities Commission have responded in the past to crowdfunding by issuing new regulations on equity crowdfunding and P2P lending, we expect that certain measures will be taken by the authorities to regulate this new technological advancement in undertaking fundraising by companies. It would just be a matter of time that the ICOs will too be regulated.