This article first appeared in The Edge Financial Daily on November 7, 2017 - November 13, 2017

KUALA LUMPUR: The Securities Commission Malaysia (SC) said it is working closely with Bank Negara Malaysia (BNM) in coming out with a framework on cryptocurrency, and expects to launch it in the next few months.

SC chairman Tan Sri Ranjit Ajit Singh said the commission is also involved in discussions at the International Organization of Securities Commissions with regard to this matter.

Different positions have been taken by different regulators around the world but the SC wants to ensure that recent developments in its global network are weighed properly, Ranjit told reporters yesterday at the sidelines of SCxSC Digital Finance Conference 2017.

“We note the growing interest of Malaysian investors in trading cryptocurrencies and digital assets. To facilitate such activities in our market and put in place investor safeguards, we are reviewing relevant regulations and guidelines to allow functional and effective use cases of digital assets in the capital market including the seconding market trading of established cryptocurrency and digital assets,” he said.

Ranjit said the SC will have the appropriate cryptocurrency posture and framework that would allow some qualified cryptocurrency exchanges.

“Together with BNM, we will look at the area carefully and as SC is in charge of the secondary market, we would craft regulations to ensure that the trading values have the right conditions in place for market integrity and investor projection purposes,” he said.

Ranjit said there are several operating exchanges that have come to talk with the SC, and once the framework is on, it would be in a position to see which exchanges are registered.

Meanwhile, Ranjit said through its Alliance for FinTech (aFINity) programme launched in 2015, the SC has included innovation labs to test new digital innovations in the industry.

The programme has started a pilot project to explore the use of distributed ledger technology (DLT) or blockchain technology in the unlisted and over-the-counter (OTC) market space, said.

“The findings from the pilot [project] would be published as an industry blueprint that would elaborate the technology architecture, key software functions, and development standards in the capital market segment.

“This would form the building blocks for interested parties to create a DLT-based network for unlisted and OTC markets,” he added.

The aFINity programme, set up to build the local digital finance ecosystem, has over 100 industry participants.