Malaysia is positioning itself as the next cryptocurrency hub in Asia as a rival to regional heavyweight Singapore, according to a report by FXStreet.
Like Singapore, a former Crown colony, Malaysia speaks fluent English and retains a common law court system inherited from the British. The cost of living is lower in Malaysia compared to Singapore, too.
“Yes, Malaysia isn’t spotless and graft-free like the Lion City, but it didn’t have Gigachad Lee Kuan Yew at the helm to fight corruption. Sovereign wealth funds get raided (to bankroll the Wolf of Wall Street no less) and police take the occasional bribe. But they know it’s wrong, and people get prosecuted; parties get tossed at the ballot box in their raucous democracy,” the report said.
According to the article, Kuala Lumpur also boasts a solid judicial system, with land titles secured using the Torrens title system – a legacy of the Commonwealth that guarantees property rights through a central registry system and professional surveying.
Malaysia’s common law offers clarity
But crucial to Malaysia’s goal of becoming the heart of the Asian crypto space is its use of English common law, particularly in regulatory issues.
Henry Chong, CEO of crypto exchange Fusang, said Malaysia’s common law works well for his company. “Paper shares today, digital shares tomorrow,” he said, explaining that the existing securities rules have sufficient clarity, and there is no need for a new rules.
Indeed, he believes the current rules are very clear about digital assets.
And despite Kuala Lumpur being far behind Hong Kong in terms of capital market sophistication, and a far cry from Singapore as a financial center, Malaysia has other benefits to offer.
“In the digital world, geography starts to matter a lot less. Financial centers typically grew up around geography – Hong Kong is a prototypical example. There’s proximity there, and Hong Kong became Hong Kong because people wanted to meet and interact,” Chong explained.
And once competition amongst jurisdictions become more intense, then Malaysia will have its opportunity to be the next hub.
Central bank confirms CBDC is being tested
In Jan this year, the country’s central bank, the Bank Negara Malaysia (BNM), confirmed it was testing a Central Bank Digital Currency (CBDC) to study its usefulness in creating and employing a cryptocurrency for the nation.
The BNM said at the time: “[BNM] is actively assessing the value proposition of central bank digital currency (CBDC) to Malaysia. While a decision has not been made to issue CBDC, we have focused our research on CBDC via proof-of-concept and experimentation to enhance our technical and policy capabilities, should the need to issue CBDC arise in the future.”
However, last week, Malaysia’s Deputy Finance Minister II Yamani Hafez Musa officially rejected the suggestion of promoting cryptocurrency as a legal tender.
“Digital assets such as Bitcoin and Ethereum are not suitable to be used as a payment instrument as these assets do not exhibit characteristics of money,” he said.
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