Digital Currency Is Not Legal Tender In Malaysia, Says Bank Negara

The central bank has reiterated its stand against bitcoin and similar digital currencies.

Cover image via CNBC

Bank Negara Malaysia (BNM) has reiterated its stand that digital currencies are not legal tender in Malaysia

Image via BNM

"The public is reminded that digital currencies are not legal tender in Malaysia," it said in a report by The Star Online

BNM first made its stand against digital currencies like bitcoin in 2014. 

BNM has advised the public to be cautious when investing in digital currencies as they will not be protected by existing banking laws, in the case of any dispute or losses

Image via The Sun

"These include risks arising from high volatility in prices, the lack of deep markets and vulnerabilities to a cyberattack which can lead to significant losses," it added.

Earlier this year, bitcoin's worth fell USD11,000 (RM44,900) when it suffered a temporary outage due to a cyberattack.

The central bank revealed it is currently setting up a new policy to prevent money laundering and financing risks associated with the use of digital currencies like bitcoin

Image via Coingecko

β€œThe proposed policy sets out the legal obligations, requirements, and standards that digital currency exchangers - which will be defined under the first schedule of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) - must carry out as reporting institutions," it said.

To increase transparency, a digital currency exchanger must declare its details to BNM as a reporting institution. Failure to do so may subject the exchange to enforcement provided under AMLA.

However, BNM added that the draft regulations are not an authorisation or endorsement of any entities involved in the provision of digital currency exchange services.

BNM governor Tan Sri Muhammad Ibrahim said last month that the bank had begun work on the regulatory structure for digital currencies

Image via theSunDaily

"We need to prepare ourselves, as according to many pundits, digital currencies will become the new norm. The advent of digital currencies as some have forecast, will mark the beginning of a new era in the financial sector. As authorities, we cannot be oblivious to these developments," Muhammad was quoted as saying by Bernama.

What do you think? Should BNM recognise digital currencies as legal payments in Malaysia? Let us know your thoughts in the comment section below.

Still can't grasp your head around this digital currency phenomena? Here's a quick rundown:

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