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9 Malaysian Banks Team Up for Trade Finance Blockchain Apps

Nine Malaysian banks have teamed up to develop blockchain applications for trade finance, according to the country’s central bank.

In a speech at a banking event on Thursday, Jessica Chew Cheng Lian, deputy governor of Bank Negara Malaysia (BNM), took a positive tone, saying the country is embracing emerging financial technologies, including blockchain, to advance banking services.

Lian said:

“In the blockchain space, the industry in a number of jurisdictions has pooled resources to defray the cost of experimentation involved in developing scaleable use cases for the technology’s application. In Malaysia, nine banks have done this by coming together to develop blockchain applications for trade finance.”

While the deputy governor’s remarks did not disclose which banks are involved in the collaboration, or further details of blockchain project being developed, they offer a window into the central bank’s approach to the techology.

To that effort, Lian further said that BNM has formed an open Application Program Interface implementation group, with members from the financial sector, as well as major fintech startups, whose main agenda is to develop a standardized open API framework.

The effort is aimed to further broaden access to financial technologies such as blockchain in a bid to facilitate adoption by financial institutions, according to Lian.

Malaysian coins image via Shutterstock

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Malaysia's Central Bank Releases Draft Rules for Cryptocurrency Exchanges

Malaysia’s central bank has published new draft regulations for cryptocurrencies that operate in the country.

On Thursday, Bank Negara Malaysia announced the move in a release on its website, asking the public to weigh in on measures aimed at easing money laundering and terrorist financing concerns related to cryptocurrencies. The publication follows months of work in this area.

The proposed regulations require businesses to verify their customers’ identities, monitor transactions and report any suspicious activities to Malaysian authorities. Additionally, companies must report usage statistics to the central bank.

If approved, the regulations would apply to any person or company which exchanges cryptocurrency on behalf of someone else. And while the regulations acknowledge that companies might use cryptocurrencies, the nation officially still does not recognize them as legal tender.

The draft rules state:

“Members of the public are therefore advised to undertake the necessary due diligence and assessment of the risks involved in dealing in digital currencies or with entities providing services associated with digital currencies.”

Bank Negara Malaysia is taking written feedback on the draft rules until Jan. 14, according to the release.

The regulations were explained by governor Muhammad Ibrahim last month as tools to prevent illicit money transmission. While the regulations will only apply to exchanges – “which are being referred to as “reporting institutions” – the country’s securities regulator is looking at creating a framework for cryptocurrencies in general as well.

Kuala Lumpur image via Shutterstock

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Malaysia's Central Bank Is Considering a Cryptocurrency Ban

The governor of Malaysia’s central bank would not rule out a ban on cryptocurrencies when discussing upcoming regulation yesterday.

However, it appears that the institution, Bank Negara Malaysia (BNM), is still undecided as to which route to take regarding the technology.

Speaking to reporters at a financial crime conference in Kuala Lumpur, the governor said BNM will decide “before the end of the year” whether to ban the trading of cryptocurrencies entirely. In subsequent statements however, Ibrahim hinted that Malaysia’s final stance might not be so severe.

According to the Malaysian Insight, he said:

“The guidelines that we will be issuing before the end of the year will address issues in terms of registering the players, collecting data and ensuring that whatever they do will be transparent.”

Pushed for further information, Ibrahim called for patience. “Now is only October,” he said. “In less than three months we will give you the details.”

While it had previously stated that bitcoin would be left unregulated, BNM announced in September it would begin to create guidelines for entities working with cryptocurrencies.

Last month, the country’s financial regulator issued an investor warning for those participating in blockchain token sales, also called initial coin offerings (ICOs).

That announcement came soon after Chinese authorities issued a statement in early September ordering an immediate halt to all token sales. Under seeming regulatory pressure, leading cryptocurrency exchanges came forward in the subsequent weeks to announce they would be voluntarily closing their doors in light of the ban.

Bank Negara Malaysia image via Shutterstock

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Malaysia's Central Bank Is Close to Drafting New Cryptocurrency Rules

Malaysia’s central bank is reportedly planning to draft cryptocurrency regulations by the end of this year.

Muhammad bin Ibrahim, governor of Bank Negara Malaysia (BNM), told reporters at a symposium on September 19 that the institution wants to develop rules for those trading and exchanging cryptocurrencies. That process would also involve the reinforcing of existing regulations on money laundering and terrorism financing, he said, according to regional news source Free Malaysia Today.

Bin Ibrahim was quoted as saying:

“We hope that by year-end, [we] will be able to come out with some guidelines on cryptocurrency, particularly those related to anti-money laundering and terrorist financing. We want to ensure there are clear guidelines for those who want to participate in this particular sector.”

It’s unclear at this time what shape those regulations will take, or whether other regulatory bodies will take part in the process. However, the move represents a shifting stance on the part of the central bank, which said in early 2014 that it “does not regulate the operations of bitcoin.”

At the time, the BNM said that it does not consider bitcoin to be legal tender.

Further, the statements represent the latest regulatory development in Malaysia around the technology. Earlier this month, the Malaysian Securities Commission, which oversees financial markets in the country, warned investors against initial coin offerings (ICOs).

Malaysian bank notes image via Gwoeii/Shutterstock

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