After the news that China has clamped down on Cryptocurrency, and banned all exchanges, which saw a slight decline for Bitcoin, good news is well and truly needed. This comes in the form that Malaysia has recently legalised Bitcoin, which is great news for cryptocurrencies, and could bring in millions of new users.
It has been reported that Malaysia’s central bank is working to develop a framework that would regulate the use of different cryptocurrencies. The Governor Muhammad bin Ibrahim has released a statement saying that by the end of the year, they hope to have issued guidelines on cryptocurrencies, particularly around the cryptocurrencies that are related to anti-money laundering and terrorist financing.
Despite stating just three years ago, that Bitcoin would not be recognised as legal tender, this big U-turn has been marked as an important event for both Malaysia, and Bitcoin; not to mention other cryptocurrencies.
We will take a look at why this is not just a good thing for Malaysia, but for Bitcoin as a whole, and why it could attract millions of more users, increasing the overall demand for Bitcoin.
What this means for Malaysia? What has caused this huge turnaround for Malaysia, and why are they now fully supporting cryptocurrencies?
The recent development could bring some big changes to Malaysia and surrounding areas, with most notably the large number of expat workers, who send a lot of their money out of the country, and to their respective home countries. In recent months, they have been hit by monetary devaluation and strict capital controls, which has had a detrimental effect on their money.
Malaysia has always had strict rules and regulations surrounding cryptocurrencies, which is why this U-turn seems surprising to some. Despite the fact that they have long remained tight lipped when it comes to cryptocurrencies, the country’s central bank; Bank Negara is considerable openminded – something that is actually very refreshing to see these days. Many financial institutions frown upon cryptocurrencies because they feel that as a country, they will never be able to properly regulate it.
Just two weeks ago, the Malaysian Securities Commission issued a strong warning not to invest in cryptocurrencies; however, this is nothing new, like we previously stated above. Right now, Malaysia is working to come up with a framework that will allow traders to trade in Bitcoin and other cryptocurrencies, but one that also address money laundering and terrorist financing. The country is known for its growth, and many other economic accomplishments, and inevitably wants to apply a similar strength to cryptocurrency, which will not be easy, which is why they are working hard to come up with an effective framework.
This is a very exciting move for Malaysia though, and many experts are predicting that the nation may become one of the next major cryptocurrency hubs in the coming years, and one to keep a definite eye on.
Why this is a good thing…
The news that Malaysia is legalising Bitcoin is ultimately a great thing, as it could bring millions of new users.
We previously mentioned that the Malaysian government was hit hard with the devaluation of the Malaysian ringgit, which caused the country’s national currency to decline by around 2 percent in value against some of the biggest currencies, such as the US dollar.
By the country legalising Bitcoin, it could provide an alternative financial and remittance system to the expat workers who were struggling to send their money to their native countries. This could give them a way in which to move money in and out of the country effectively. Despite this legalisation process still being in the very early stages, some leading Bitcoin remittance service providers and brokerages have already secured millions of dollars in funding, and have expanded their operations to Malaysia.
Of course, this theory will only work in countries where Bitcoin is very much established and well-regulated, which could prove problematic now for those wishing to send their currency to China, who have recently placed a ban on all cryptocurrencies.
However, the Malaysian central bank is still quick to point out that, despite this legalisation, they are not endorsing any cryptocurrency, as a currency as it is not issued by a central bank, and not backed by any commodity. However, what they do plan on doing is to regulate this, when it is used for the delivery of financial services.
Regardless of how it is looked at, for those in the cryptocurrency bubble, this is only a good thing, and a much welcome piece of news after China’s demise.
References And Further Reading:
• Bitcoinist; Bitcoin legalisation update: Malaysia, Ukraine and Indonesia
• iGaming; Malaysia Planning To Legalise Bitcoin
• New Straits Times; Are we ready for Bitcoin?
• The Star Online; On Mcoin, Bitcoin and points of interest
• Cryptocoins News; Top 10 Countries in Which Bitcoin is Banned
• Steemit; Malaysian’s Legalisation of Bitcoin
• IntelAsia; How Malaysian’s Legalisation of Bitcoin Could Bring Millions Of New Users