The Securities Commission Malaysia (SC) has put forward a proposal that could potentially simplify the process for cryptocurrency exchanges to list certain digital assets, without the necessity of obtaining prior approval from the regulatory body. The proposition was announced on Monday, indicating a potential liberalisation of the framework for digital asset listings on exchanges.
The proposed rules, if accepted, would allow digital assets that meet specific criteria to be listed without explicit regulatory approval. “The intention behind this move is to expedite the time-to-market, enhance accountability of crypto exchange operators, and expand the variety of product offerings,” the announcement detailed.
Under the new regulations, the exchange would bear the responsibility for its decision to list a particular asset. The digital assets to be listed must have passed security audits with publicly accessible results and must have been traded for a minimum of one year on a platform that complies with the Financial Action Task Force.
The SC is currently seeking industry feedback on whether to allow trading of certain types of assets considered higher risk, such as privacy coins like Monero (XMR), due to their enhanced privacy features. The regulator is also inviting comments on assets following internet trends or pop culture, also known as memecoins, due to their volatile nature.
Stablecoins, tokenized assets, and exchange tokens are also under scrutiny due to potential conflicts of interest. The SC is also seeking opinions on assets with low market demand, such as “nascent utility tokens,” as they carry higher risk.
Moreover, the SC has proposed a revision of client asset security and governance requirements. Crypto exchanges would be subject to stricter rules, including user assets segregation. They would also need to meet new minimum financial criteria, including risk mitigation policies and procedures to prevent loss or misuse of user funds and ensure repayment in the event of insolvency.
The proposal also stipulates that these institutions must have a senior management member residing in Malaysia responsible for wallet administration. Lastly, crypto exchanges holding user assets would be required to register as a digital asset custodian or engage a registered custodian with the SC to provide its services.
