No problem with regulation, but bitcoin enthusiasts urge official exchanges

KUALA LUMPUR, Nov 30 — Bitcoin professionals welcomed the central bank’s move to regulate cryptocurrencies, but also called for official exchanges in Malaysia.

Colbert Low, founder of blockchain advisory firm Celebrus Advisory, said trading liquidity would naturally gravitate to centralised exchanges as the crypto market matures or becomes mainstream.

“Having an exchange provides a trusted execution environment and is a logical next step to integrate crypto and fiat activities,” Low told Malay Mail Online.

“We support the regulatory effort to bring exchanges out in the open as reporting bodies to foster greater compliance discipline and transparency,” added the founder of BitcoinMalaysia.com, a local private membership club for bitcoin.

Bank Negara Malaysia (BNM) denied a news report yesterday claiming it would appoint an official cryptocurrency exchange, stressing that there were no formal plans to do so.

The central bank said instead that it would consider all parties that provide exchange services as “reporting institutions”, which means they will be required to provide detailed information on buyers and sellers of cryptocurrencies.

Bobby Ong, co-founder of CoinGecko, a cryptocurrency data platform that tracks data for hundreds of cryptocurrencies, said cryptocurrency industry players were hoping for progressive regulations.

“Restrictive regulations like China banning crypto exchanges will only push activities underground and there will be no formal mechanism to monitor activities in the industry.

“Japan has been the most progressive so far by releasing 11 cryptocurrency exchange licenses. US (New York) is also very progressive with the release of BitLicense,” Ong told Malay Mail Online.

He said Malaysia would be able to attract global talent to innovate in the blockchain industry — which is a decentralised, digital, public ledger used to record all cryptocurrency transactions — by having a favourable crypto framework.

“There are startups in Malaysia that are world leaders in this space,” said Ong.

Although the public can know which bitcoin addresses sends how much of the digital currency to which other addresses through the blockchain, Ong said bitcoin addresses were random numbers and the owners of these addresses were unknown.

“That’s why BNM wants exchanges to report on people who move fiat to crypto,” said Ong.

“Bitcoin is very transparent and is very bad use case for money laundering or doing illegal activities, for example buying drugs on the dark web. Everyone can see the money flow and there are forensics that can uncover the identity of people who try to hide them.

“Exchanges need to be regulated because fiat flows to a bitcoin address. After that we can see where and how and when the bitcoin is spent and moved around in the ecosystem,” he added.

At the time of writing, 1 BTC is worth over US$8,600, according to currency converter site XE.com. — Reuters pic

According to Fortune, although bitcoin is the predominant cryptocurrency in the world, it only accounts for just over half of the crypto market capitalisation as new currencies are being developed, launched and spent.

Unlike normal currencies, the value of one unit of bitcoin — 1 BTC — has no intrinsic value, since it is not backed by any physical assets, or guaranteed by a sovereign government or central bank.

Instead, its value depends solely on its acceptance as a currency, and the public’s confidence in bitcoin.

At the time of writing, 1 BTC is worth over US$8,600 (RM35,480), according to currency converter site XE.com.

The currency’s extreme volatility led Bank Negara Malaysia to announce in January 2014 that it was not legal tender in the country. 

Editor’s note: A previous version of this article incorrectly reported that Bobby Ong runs Altcoin Weekly. His designation has since been updated.