Malaysia Launches Public Consultation on New National ICO Framework

Malaysia Launches Public Consultation on New National ICO Framework

The Securities Commission Malaysia (SC) has published two consultation papers calling for public feedback on the framework to be used for initial coin offerings (ICOs) and property crowdfunding.

Divided into sections, the ICO paper sets out the purposes and basic mechanics of offerings as well the associated risks which leads into their view of the need for regulation. The bulk of the document, however, is devoted to a proposed regulatory framework and asks for written comments from the public on this framework by 29th March.

Following a similar format and deadline, the crowdfunding paper focuses on eligibility requirements of first-time buyers, property criteria, obligations of platform operators and their financing limits

Nascent Market with Potential

The move to invite public responses follows several months of the SC asking investors to be mindful of the potential risks in investing in digital assets.

This new ICO document describes the digital asset industry as a “relatively nascent market” that is “much smaller than the size of the overall Malaysian capital market.” However, the SC recognises “the potential use cases of blockchain and digital assets in enhancing efficiencies… [and] …also the potential to act as an alternative asset class for investors.”

Within the proposed framework sits the suggestion that the “…SC should leverage on a recognised market operator or a qualified third party to conduct an initial assessment of an ICO…[and]… the application to the SC for authorisation should be conditional on the ICO being hosted by the said recognised market operator or third party.”

The suggested criteria for a potential ICO issuer is multifaceted but it is proposed that only a locally incorporated company – with its main business within Malaysia, meets minimal capital requirements and is not a public listed company – may undertake ICOs. However, there is room for public listed companies to establish a separate entity to issue an ICO should they wish to do so.

A limit on the amount of investment raised is also under consideration with the SC suggesting a ceiling of 10 times the shareholders’ funds and capped at 100 Million Malaysian Ringgits (approximately $24.5 Million).