Malaysia’s Government Is Reportedly Still Deciding Whether Cryptocurrencies Should Be Legal

The government of Malaysia is reportedly still deciding whether or not cryptocurrencies should be legalized in the country, as according to its Federal Territories Minister Khalid Abdul Samad the “matter was still under consideration” as of January 12.

Speaking to local news outlet New Straits Times, the policymaker revealed that while he was involved in the launch of the Harapan Coin (HRP) – a propose political cryptocurrency – he wasn’t appointed the country’s finance minister, and as such can’t push the matter.

He was quoted as saying:

People have asked me if these [crypto]currencies are legal or illegal. At the moment, the answer is neither legal nor illegal as the situation is still unclear.

Notably, the Malaysian government claimed in December of last year that it was working on regulations for cryptocurrencies and initial coin offerings (ICOs). The Harapan Coin, according to the news outlet, has been pitched to the Bank Negara Malaysia, the country’s central bank, and to Prime Minister Tun Dr Mahathir Mohamad for government transactions.

Shortly after, a Malaysian Member of Parliament reportedly asked the government to set up proper cryptocurrency regulations before considering the HRP project.

Samad’s words came as he was commenting on the success of a school aid presentation for 100 orphans organized by Blockchains.My, a fintech venture. The cryptocurrency scene has been growing in Malaysia, and the country’s authorities have been keeping an eye on the market, as those looking to lunch cryptos must go through the central bank first.

In July of last year, over 12 Indian businessmen reportedly lost thousands of dollars to a Malaysian cryptocurrency Ponzi scheme.

Unregulated Crypto Derivatives Exchanges Dominate Regulated Alternatives

Trading volume on unregulated Bitcoin (BTC) derivatives exchanges is growing rapidly, and continuing to far outpace their regulated-institutional counterparts, according to the most recent (March) CryptoCompare Exchange Review.

unregulated exchange volume(source: CryptoCompare)

Both OKEx and bitFlyer exchanges hosted an average daily derivative trading volume worth well over a billion dollars during March - $1.5 billion and $1.14 billion respectively according to CryptoCompare. It seems then that the older derivative stalwart BitMEX, at $645 million daily average volume, has been rapidly eclipsed by the newer exchanges.

regulated exchange volume(source: CryptoCompare)

Institutional, fiat-dealing (regulated) exchanges hosted a fraction of this volume, the highest being $70.5 million on the CME exchange. CryptoGlobe reported last month the CME’s primary competitor, the CBOE, was shuttering its Bitcoin futures products citing low demand. CME volume spiked last month, but is down this month below to January levels.

However, despite the relatively low average volume, the CME did have one bumper day of record-breaking Bitcoin futures trading volume, trading nearly $550 million worth of bitcoin on April 4th - days after Bitcoin’s unbelievable breakout from its $4,200 resistance.

Outflanked

The ease of onboarding new customers may explain why the unregulated exchanges get more attention.

In a recent interview, BitMEX CEO Arthur Hayes underlined his exchange’s ability to “onboard a [new] customer within 10 minutes,” by accepting Bitcoin and only Bitcoin for funding. In addition, no KYC/AML checks are required to trade on BitMEX, merely an email address; whereas OKEx offers margin trading only after basic KYC/AML checks. These exchanges are registered in Seychelles and Malta, respectively, specifically to avoid such onerous accounting requirements for their customers.

As CryptoGlobe covered early in 2019, however, BitMEX and other derivative exchanges including OKEx officially exclude certain citizens from trading on their platforms due to regulatory concerns, most notably US citizens.

Hayes also intimated at the upcoming launch of an interest bearing Bitcoin-only bond, which he speculated could be used to leverage credit into future Bitcoin-denominated economic activity.