KUALA LUMPUR: The Securities Commission (SC) has not authorised any initial coin offerings (ICOs), pending the finalisation of its guidelines.
It said it had noted an increase in the number of queries and complaints from members of the public regarding ICOs and digital asset exchanges (DAX).
“The SC advises the public to be wary of any persons offering ICOs. Any offering of digital assets as well as its associated activities such as marketing or inducing others to subscribe to an ICO will require authorisation from the SC,” it said in a statement.
This follows the coming into force of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 (Prescription Order) on January 15, 2019.
The SC said investors should be mindful of the potential risks associated with ICO schemes, notably an ICO issuer not having a physical presence in Malaysia would make it difficult to verify the authenticity of the ICO.
“The recovery of invested monies may be subject to foreign laws or regulations,” it added.
The SC also warned investors against involvement of unauthorised individuals that may heightens the risk and exposure to fraud, money laundering and terrorism financing, the fact that certain ICO may be structured in such a way as to limit the legal protection and recourse for the investors against an ICO issuer and cyber-security risks including hacking and stealing of online personal information.
SC urged investors to be cautious when considering to buy or sell digital assets through trading platforms.
Even though a platform may call itself an ‘exchange,’ it does not mean it has been authorised by the SC.
As of June 4 this year, the SC registered three Recognised Market Operators (RMOs) to establish and operate DAX in Malaysia.
They are Luno Malaysia Sdn Bhd, SINEGY Technologies (M) Sdn Bhd, Tokenize Technology (M) Sdn Bhd.
They have been given nine months to fully comply with all regulatory requirements.
“Apart from the three operators mentioned above, no other online platforms are permitted to establish and operate a DAX in Malaysia currently. As such, all other DAX operators are required to immediately cease all activities related to the trading of digital assets and return all monies and assets collected from investors.
“This also applies to operators who were under the SC’s initial transitional period list.
“Operating a DAX or launching or marketing an ICO without authorisation from the SC is an offence under securities laws. Persons in breach may be liable to a fine or imprisonment term not exceeding ten years or both,” it said.
The public can verify if a digital asset operator is registered with the SC at https://www.sc.com.my/development/digital/digitalassets.