Open a Cryptocurrency Company in Malaysia
Updated on Friday 22nd May 2020
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Cryptocurrencies are digital currencies that are not issued or regulated by the Government and offer a secure payment option for transactions. Cryptocurrencies encompass both Bitcoin – the most popular version – and alternative coins or altcoins – which are all digital currencies which are not Bitcoin.
Our team of lawyers in Malaysia can help you with detailed information and legal assistance if you want to open a cryptocurrency company in Malaysia.
The cryptocurrency market is one where multiple players are involved. A company that activates in this field can offer specific services, such as an exchange for these digital currencies, or be involved in the development of a new type of coin. Below, our attorneys in Malaysia highlight some of the groups of players and/or key providers of services in the cryptocurrency sector:
- Cryptocurrency exchange: legal entities that provide exchange services to cryptocurrency users, for a pre-set fee (a commission); the user can buy or sell coins with or for fiat currency;
- Wallet: companies that develop and offer services related to e-wallets, used for holding and storing as well as transferring the coins;
- Trading platform: a market that used by cryptocurrency users to buy or sell coins; the users trade directly with each other;
- Coin investors: organizations that are directly involved in the creation and the improvement of the crypto currency’s code and algorithm;
- Coin offerors: organizations that offer coins to users following an initial release (through payment or crowdsale or charge-free based on a subscription service); this is done to further fund the development of the coin and increase its popularity.
The coin offeror can be the same as the inventor or this can initial release can be handled by another organization.
These services are all provided to the cryptocurrency user, who can be either a natural or a legal person who acquires the coins and uses them, thus requiring certain types of services for safely storing, using, and exchanging his assets.
As seen from the brief description above, there are several sub-sectors in which a cryptocurrency company can be involved din Malaysia. Investors who are interested in opening a company and offering crypto-related services in the country can also provide custody solutions that refer to storage and security. These types of services can target institutional investors (hedge funds, for example) who are able to hold large amounts of cryptocurrency.
Our team of lawyers in Malaysia can help you with detailed information and legal assistance if you want to open a cryptocurrency company in Malaysia.
Cryptocurrency company set up in Malaysia
The Malaysian market is an attractive marketplace for investors who want to open a cryptocurrency company. Bitcoin and other digital currencies are also being used for trading and investors are setting up companies that provide bitcoin purchase and sale services to clients, at a pre-established Malaysian ringgit rate. An example of a Malaysian bitcoin exchange company is Xbit Asia.
Alternative cryptocurrencies in Malaysia include Ethereum Litecoin and Dogecoin. Investors who open a cryptocurrency company and even those who plan on buying cryptocurrency for their individual profit are advised to keep in mind that this type of investment has a degree of risk and in most cases, will not yield an immediate profit.
Most investors will choose to open a private or public limited liability company in Malaysia and start working with blockchain platforms and cryptocurrencies. The team of experts at our law firm in Malaysia can give you complete details on the company set up process, including the requirements for foreign investors. We can also help you with taxation information.
Cryptocurrency company regulation in Malaysia
The Malaysian Securities Commission is the primary regulator for the digital assets sectors, the related activities, and the regulation of companies that operate in this field.
At the beginning of 2019, the Commission published the formal guidelines on digital assets, a document used as the framework for making token offerings and complying with other obligations that must be met by token issuers. Later that year, the first three crypto trading platforms were conditionally approved and given the time to meet the necessary registration requirements.
Cryptocurrencies and initial coin offerings, as well as related activities, are to comply with the securities law and are subject to approval by the Commission.
The Guidelines on Digital Assets, issued by the Commission, and the Anti-Money Laundering and Counter Financing of Terrorism Digital Currencies act by Bank Negara Malaysia, the country’s Central Bank, are important legal resources for investors who enter the digital currencies sector. Upon request, our team of lawyers in Malaysia can provide additional information on the rules and regulations set forth in these two documents.
As new laws come into force, issues like market transparency, anti-money laundering, registering the cryptocurrency companies in Malaysia, and data collection will be further regulated. This can be seen as a step towards encouraging this evolving industry, as new and favorable regulations in Malaysia could bring even more investments in cryptocurrency in Malaysia.
One of our lawyers in Malaysia can give you further details when the new policies are issued and can answer any questions related to your existing cryptocurrency business.Cryptocurrency awareness in Malaysia and Asia
A comprehensive publication by OECD, issued in 2019 titled “Cryptoassets in Asia. Consumer attitudes, behaviors, and experiences” reveals that the Malaysian market has a satisfactory level of cryptocurrency awareness, compared to other countries in Asia where financial consumers are less aware of cryptoassets. The following excerpts, presented by our lawyers in Malaysia, are relevant for highlighting this:
- Cryptocurrency awareness: 80% of study respondents in all of the three analyzed countries (Malaysia, Philippines, and Vietnam) were aware of cryptocurrencies;
- Malaysian awareness: in Malaysia, for a sample size of 1,000 individuals, 84% were aware of cryptocurrencies, however, respondents were less ware of initial coin offerings, with only 40% in Malaysia;
- Cryptocurrency ownership: as far as cryptocurrency ownership was concerned, in Malaysia 23% of respondents said that they currently held digital tokens.
- ICO investment advice: in Malaysia, 46% of the responders said that their source of advice for an ICO investment was a professional, such as a financial adviser; 40% said that their adviser was an expert in blockchain technology.
The same publication revealed that the demographics of the respondents who held cryptoassets in all of the targeted countries: they were employed individuals with University degrees.
The quoted research shows that the level of awareness is high among financial consumers and the Malaysian cryptocurrency sector has important potential for development.
Contact us for more information on opening a company in Malaysia and business regulations in different fields.