28 February, 2018
Both the Securities Commission Malaysia (“SCM”) and Bank Negara Malaysia (“BNM”) have issued a joint cautionary statement to draw the public’s attention to initial coin offering (“ICO”) schemes which may involve activities that are subject to the laws administered by any of these regulators. Both regulators highlighted the following:
- that the carrying on of such activities without proper authorisation is an offence.
- issuers of ICOs are reminded that the launching of an ICO, offering of digital tokens and any incidental activities thereof may trigger regulatory requirements under securities law.
- the carrying on activities such as fundraising, fund management and dealing in capital market products are prohibited unless the necessary approval or authorisation is obtained from the SCM.
- ICO operators are prohibited from undertaking regulated activities such as deposit taking, banking business or foreign exchange administration activities, without the necessary authorisation under financial services law offered by BNM.
- the public is advised to exercise caution prior to participating in any ICO.
It is further indicated that both regulators will not hesitate to take action against any person conducting illegal or unauthorised activities. One example is where the SCM had recently issued a cease and desist order to Singapore-based CopyCash Foundation to halt all its activities in Malaysia, including a purported plan to launch an ICO on 10 January 2018. The SCM said its decision came after it found “reasonable likelihood” that disclosures in CopyCash’s white paper, as well as its representations to potential investors, will “contravene relevant requirements under securities laws”
For further information, please contact:
Pamela Kung, Partner, Shearn Delamore & Co
pamela@shearndelamore.com
