The launch of Facebook’s new cryptocurrency Libra has caused mixed sentiments between both supporters and opponents of the new cryptocurrency.
The positive sentiment doesn’t seem to go well for the regulators. In just 24 hours, United States, United Kingdom including other G7 countries have announced that Libra will be subject to the financial regulations. In other words, Libra can’t simply roll out unless getting the green lights from the respective regulators.
Will we see another Zuckerberg’s “move fast, and break things” motto like how Uber adopted several years ago when the ride sharing app rolled out its services?
In any case, it looks like Libra’s team will have a long way to go.
Last week before the Eid break, the Securities Commission announced the result of the first round of crypto exchanges in Malaysia.
The three successful applicants are Luno, Sinegy and Tokenize. The statement doesn’t say how many applicants actually applied for the licence. However, according to FintechNews.my, a Malaysian based fintech news site, claimed that 19 applicants have applied under this round.
Under the Guidelines on Recognised Markets, the crypto exchanges will be regulated as a recognised market operator (or RMO for short). The guidelines which also applies to equity crowdfunding and peer to peer lending will require the successful applicants to operationalise their respective crypto exchange platforms within specified timeframe imposed by the regulator usually set out in the conditional approval letter.
The regulator also reiterated the earlier finance minister’s warning last year that operating unlicensed crypto exchange can lead to RM10 milion fine and 10 years jail time or both.
As a general investor, dealing with a regulated crypto exchange may offer better protection as the exchange is regulated by the Securities Commission.
As it’s clear form the statement that unregulated crypto exchanges needs to cease their activities immediately, anyone with monies held by such unregulated operators are advised to withdraw their monies and assets as soon as possible.
As an unlicensed operator, the operator may either cease their operations completely or continue operating elsewhere ie operator outside Malaysia. In other words, the platform will be domiciled in a neutral jurisdiction which does not regulate crypto exchange. As an investor, the challenge obviously again is the legal recourse in the event that the operator fails or runs away with your monies.
In the next post, I will share a summary of the salient features of a regulated crypto exchange.