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INTRODUCTION
The blockchain technology has introduced the world to a digital
distributed record-keeping system that is nearly impossible to
hack. This nascent technology underlies the very creation and the
implementation of digital assets by recording their provenance.
Blockchain-powered digital assets are currently being offered and
traded on various platforms, and with more entrepreneurs and
investors showing interests in the market, countries worldwide are
prompted to regulate the offering and trading of digital assets. In
Malaysia, the offering and trading of digital assets as securities
is regulated by the Securities Commission Malaysia
(“SC“).
THE REGULATORY FRAMEWORK OF DIGITAL ASSETS IN MALAYSIA
Digital assets are recognised as securities under the Capital
Markets and Services (Prescription of Securities) (Digital Currency
and Digital Token) Order 2019 (“Prescription Order
2019“), for the purposes of securities laws in
Malaysia, if the criteria set out in the Prescription Order 2019
are satisfied. Digital assets come in many forms, but under the
Prescription Order 2019, digital assets are categorised into two
particular types which are digital currency and
digital token.
The term digital currency is defined under the
Prescription Order 2019 as a digital representation of value which
is recorded on a distributed digital ledger, whether
cryptographically-secured or otherwise, that functions as a medium
of exchange and is interchangeable with any money, including
through the crediting or debiting of an account money.1
Meanwhile, the term digital token is defined as a
digital representation which is recorded on a distributed digital
ledger, whether cryptographically-secured or otherwise.2
Accordingly, any digital assets which are not recorded on a
distributed digital ledger do not fall under the…
