Malaysia - Guidelines on Digital Assets.
Legal News & Analysis - Asia Pacific - Malaysia - Banking & Finance
5 February, 2020
The Securities Commission Malaysia (“SC”) had, on 15 January 2020, issued the Guidelines on Digital Assets (“Guidelines)” which sets out the requirements for:
a) issuers fundraising through digital token offerings; and
b) platform operators of initial exchange offering (“IEO”) platforms.
The Guidelines is issued following the period of feedback from the public on Public Consultation Paper No. 1/2019 published by the SC in March 2019 with regards to the issuance of digital assets through initial coin offerings.
Pursuant to the Guidelines, issuers will offer digital tokens via IEO platforms rather than on their own. Some of the governance and capital requirements include:
issuers must be locally incorporated and have a minimum paid up capital of RM500,000;
proposed projects or businesses provide an innovative solution or a meaningful digital value proposition for Malaysia;
issuers may raise funds up to a ceiling of RM100 million. Fundraising may be sought from retail, sophisticated, as well as angel investors subject to the investment limits provided for each;
each issuance must be accompanied by a Whitepaper which should provide investors with among others, material information on the issuer, the digital token and the utilisation of funds through the fundraising exercise;
the SC will conduct post issuance monitoring of the utilisation of the proceeds.
The SC has emphasised that until the coming into force of the Guidelines, no person is permitted to offer or issue any digital tokens in Malaysia. The Guidelines will become effective in the second half of 2020.
The Guidelines can be found in full here. They should be read together with the SC Guidelines on Recognised Markets (May 2019) and the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019. It should also be noted that digital assets are not legal tender in Malaysia.
For further information, please contact:
Putri Noor Shariza Noordin, Partner, Shearn Delamore & Co