KUALA LUMPUR: The law on digital currencies and digital tokens will come into effect on Tuesday and any person operating unauthorised initial coin offerings (ICOs) or digital asset exchange faces a 10-year jail and RM10mil fine.

Finance Minister Lim Guan Eng said on Monday after the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 would be effective Tuesday and the framework in place by end of the first quarter of this year.

With this ruling, digital currencies and digital tokens or digital assets are prescribed as securities and will be regulated by the Securities Commission (SC).

Lim said such instruments and their associated activities must be first approved by the SC and need to comply with the relevant securities laws and regulations.

“The Ministry of Finance (MOF) views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries. 

“In particular, we believe digital assets have a role to play as an alternative fundraising avenue for entrepreneurs and new businesses, and an alternate asset class for investors,” he said.

Lim said the SC would put in place regulatory requirements for the issuance of ICOs and the trading of digital assets at digital asset exchanges in Malaysia. 

“Any person offering an ICO or operating a digital asset exchange without SC’s approval may be punished, on conviction, with imprisonment not exceeding 10 years and fine not exceeding RM10mil,” he said.