With regulators shaking the cryptocurrency community to the core with their contrasting extreme stance on initial coin offerings (ICOs) these past few weeks, the Malaysian authority has decided to take a more careful approach in between the two polar opposites.
Securities Commission Malaysia (SC) has cautioned investors against digital token-based fundraising activities and investment schemes, but has neither outlawed ICOs as China has done nor embraced token offerings as the Isle of Man has.
Compared to the harsh position the Chinese government has taken this month or even the rasping tone of other regulators such as the UK’s Financial Conduct Authority which has termed ICOs “very high-risk, speculative investments” which should only be reserved for the “experienced investor” who needs to be “prepared to lose your entire stake”, the SC’s language is arguably mellow.
The Malaysian regulator has asked investors to be “mindful” of the potential risks involved in ICO schemes, and for consumers to “fully understand the features of an ICO scheme, and carefully weigh the risks before parting with their monies”.
“As the terms and features of ICO schemes may differ in each case, investors who wish to engage or invest in ICO schemes are reminded to seek legal or other professional advice if there are doubts on the legitimacy of these schemes,” the SC noted.
Like in most jurisdictions, virtual currencies or digital tokens are unregulated in Malaysia and controversial ponzi-like schemes are on the rise in the country. Caution is also urged amid plans by several fintech players – including Shariah compliant and Shariah-based ones – to launch token crowd sales.