Project Dunbar, which will be led by the Innovation Hub’s Singapore Centre, aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs. The multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions. 

The project will work with multiple partners to develop technical prototypes on different distributed ledger technology platforms. It will also explore different governance and operating designs that would enable central banks to share CBDC infrastructures, benefitting from the collaboration between public and private sector experts in different jurisdictions and areas of operation.  

Project Dunbar will explore the international dimension of CBDC design and support the efforts of the G20 roadmap for enhancing cross-border payments. Its results, expected to be published in early 2022, will inform the development of future platforms for global and regional settlements. 

Under the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019, all digital currencies and digital tokens that satisfy the requirements in the Order are securities for purposes of securities laws.

In line with digital currencies and digital tokens being prescribed as securities, the guidelines set out the requirements on fundraising activity through digital token offering, operationalisation of initial exchange offering (IEO) platform and provision of digital asset custody.

"Notwithstanding anything in these Guidelines, digital currencies and digital tokens are not recognised as a legal tender nor as a form of payment instrument that is regulated by Bank Negara Malaysia," the guidelines said.

The guidelines apply to all:

• issuers seeking to raise funds through digital token offering;
• persons intending to operate an IEO platform; and
• persons intending to provide the services of safekeeping, storing, holding or maintaining custody of digital assets for the account of another person.

A crypto ATM is a machine that allows individuals to buy and/or sell digital assets via cash, debit/credit cards or e-wallets. These machines are installed in various locations in Malaysia, facilitating the exchange of different types of digital assets with fiat currency and vice versa.

The SC said that crypto ATMs are considered to be operating a digital asset exchange (DAX) which require registration with it. In this regard, it said that it had not authorised any entity to operate crypto ATMs.

"As such, we wish to caution and remind members of the public not to deal with unlicensed or unauthorised entities or individuals. Those who do so are not protected under the Malaysian securities laws and are exposed to various risks, including fraud and money laundering," the SC said.

The SC said it has not authorised any ICOs pending the finalisation of its guidelines.

"Any offering of digital assets as well as its associated activities such as marketing or inducing others to subscribe to an ICO will require authorisation from the SC," the press release said.

This follows the coming into force of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 (Prescription Order) in January 2019.

 The SC also reminded investors to be mindful of the potential risks associated with ICOs, including:

• an ICO Regulator not having a physical presence in Malaysia would make it difficult to verify the authenticity of the ICO. Further, the recovery of invested monies may be subject to foreign laws or regulations;
• the involvement of unauthorised individuals heightens the risk and exposure to fraud, money laundering and terrorism financing;
• the ICO may be structured in such a way as to limit the legal protection and recourse for the investors against an ICO Regulator; and
• cyber security risks including hacking and stealing of online personal information.

The SC is also urging investors to be cautious when considering buying or selling digital assets through trading platforms, since even though a platform may call itself an ‘exchange,’ it does not mean the SC has authorised it.

As of 4 June 2019, the SC has registered three recognized market operators (RMOs) to establish and operate DAX in Malaysia: Luno Malaysia, SINEGY Technologies, Tokenize Technology, have been given nine months to comply with all regulatory requirements.

Apart from these three operators, no other online platforms are can establish and operate a DAX in Malaysia.

"As such, all other DAX operators are required to immediately cease all activities related to the trading of digital assets and return all monies and assets collected from investors. This also applies to operators who were under the SC’s initial transitional period list," the SC said.

Operating a DAX or launching or marketing an ICO without authorisation from the SC is an offence under securities laws, which can attract a fine or imprisonment of up to 10 years or both.

The three registered operators are: Luno Malaysia, SINEGY Technologies and Tokenize Technology.

The announcement follows the coming into force of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 on 15 January 2019, and the issuance of the revised Guidelines on Recognized Markets on 31 January 2019 to introduce new requirements for DAX operators.

DAX operators that the SC has not approved have to cease all activities immediately and return all money and assets collected from investors.

"Operating a DAX without authorisation from the SC is an offence under securities laws and a person in breach may be liable to a fine or imprisonment term or both," the SC said.

The SC also advised the public to be mindful of the risks related to trading in digital assets, including risks of trading on exchanges that are not registered with the SC.