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Malaysian Central Bank Preparing Draft Cryptocurrency Regulations

Regulation of the cryptocurrency space has become increasingly prominent in recent weeks, with governments and central banks around the world beginning to establish their own structures for regulating and overseeing crypto markets.

The latest central bank to attempt to regulate the space is the Bank Negara Malaysia, the country’s central bank, which is thought to be close to preparing a first draft regulatory framework for the industry.

According to local media reports, the regulations could be concluded as early as the end of this year, which would impact on those engaged in both trading and exchanging cryptocurrencies like bitcoin and ether.

The bank’s governor, Muhammad bin Ibrahim, addressed the media at an event earlier this week, spelling out the bank’s plans for introducing regulation in the near future.

Specifically, he indicated that terrorism financing and anti-money laundering provisions would be strengthened as part of any regulatory package.

“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.”

His statement follows on from an earlier briefing that sought to clarify that the bank does not consider digital currency to be legal tender, but represents a contrast from its earlier position of declining to regulate bitcoin.

Back in 2014, the bank said that it did not nor did it intend to regulate bitcoin. However, with an increasing tendency toward attempted regulation across the region and the wider world, and increasingly vocal warnings about the dangers of ICOs from regulators at home and abroad, the Bank Negara Malaysia appears to be developing a more hardline approach.

The distributed nature of blockchain technology makes regulation a challenging task, and many proponents of digital currencies consider regulation to be a blunt, somewhat ineffective instrument for structuring the cryptocurrency space.

Regardless, a number of central banks and governments globally have stepped up the rhetoric around regulation, and plans are already underway in several countries that would seek to clarify, tighten or introduce a baseline of regulation in the near future.

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