It was an interesting morning on 28th Feb, 2018 as I represented Blockchain Academy and accepted the invitation to participate together with several key persons from various companies, banks and government divisions to sit for a round table discussion organised by the research team of the Industry-Academia Collaborative, Faculty of Law, University Malaya on the topic of Blockchain-based regulatory framework.
The discussion was mainly to gather input and feedback from participants on the various issues revolving Blockchain, Bitcoin and cryptocurrencies as a whole and how these digital forms of currency was in line with existing legal frameworks and industry practices.
The discussions kicked off pretty smoothly with Dr. Husna Zakaria, Project Director (Faculty of Law, UM) introducing the faculty team and the gist of the topics that will be discussed throughout the half-day session. One thing I did notice and had to raise in the early part of the discussion was, the bankers were all missing.
Sadly, there wasn’t a single representative from any bank, BNM or any financial institution despite the organizers had extended invitations to most of them. For some reason, which I can’t seem to get my head around as to why their no-show, the only thought that comes to my mind (I could be wrong here) is perhaps the bankers felt the round table discussion organized by an academia, is probably a waste of their time. I have no idea. But I feel bankers should participate in these types of initiatives as much as possible if they want to gain some insights and ground level thoughts.
Anyway, I simply applaud the efforts made by the University Malaya Law Faculty team as they had made great strides to research the topics above and actually come up with the round table talk. Bravo!
The key goal of this discussion as I understood and which was made clear in their objective paper is “to encourage economic development in Malaysia without stifling innovation or compromising consumer protection by supporting start-ups, small-medium enterprises and large corporations to adopt blockchain technologies in their businesses while ensuring that it is done with a conducive and safe legal environment.”
The organizers also did mention that they intend to compile a full report after completing the round table session and submit the report to Bank Negara Malaysia (BNM) with the hopes that the central bank will be able to take the findings within the report seriously and take the necessary steps to govern or regulate digital currencies and blockchain technologies in Malaysia.
Some of the topics that were discussed…
- Currently BNM does not regulate Digital Currency exchanges. Should they?
- Digital currency exchanges convert fiat money to cryptocurrency, vice versa and convert cryptocurrency to other cryptocurrencies. These businesses are considered ‘reporting institutions’ currently under BNM’s Exposure draft on digital currencies. What about remittance companies that remit cryptocurrency are they included, or excluded from the Exposure draft? If excluded should they be included?
- Should the exchange of fiat money to cryptocurrencies be taxed?
- Should IRB come out with guidelines on tax payments for blockchain businesses?
- What do digital currency exchanges and remittance companies want to see in regulations?
- Can the blockchain technology solve consumer protection related legal and regulatory concerns? If yes, how? (Please comment on consumer’s right to rectification of error, refund, future service contracts, guarantee to get right and genuine product, legal forum/regulator, initial high costs and consumer awareness).
- For the purpose of regulating cryptocurrencies, should digital token classification be function-based?
- On the premise that a digital token does not fit squarely within the ambit of “securities” as currently defined under the existing securities regulations, should it be prescribed as one? Should it be clearly defined or flexibility should be given by stating a test instead to determine whether a digital token can be considered as securities.
- Should ICOs be regulated through existing securities regulations? If yes, should a fast-tracked approval process and simple disclosure requirement be accorded? If no, should it be banned?
- Does the blockchain process personal data? If yes, then in what context and amount the personal data can be accessed by third parties?
- Is a hash personal data or anonymised data? If hash contains any personal data, then who is the data controller and the data processor in a blockchain context? What is the applicable law?
- In a cross-border decentralised blockchain environment, can Personal Data Protection Act (PDPA) of Malaysia be applied to blockchain-based transactions that have little or no connection to Malaysia?
Just like what UM has done, I feel other quarters should also do similar sessions to broaden their minds, gain more ‘ground-level’ insights from industry practitioners and begin to think out of the box when it comes to digital currencies and blockchain technology.
One needs both hands to clap; the economic growth of the country needs all parties to work in tandem together, especially if it was to create a safe and prosperous environment for foreign direct investments and to create a digitally inclined nation. We should not fear failure but rather foresee the endless possibilities of what this new ‘disruptive technology’ can and will do to make processes simpler, more cost saving and provide transparency.
We should look at other countries to see how they have boldly stepped out of their ‘comfort zones’ and adopted new technologies like digital currencies and blockchain. Of course, it’s not going to be smooth sailing as Blockchain is still considered in it’s infancy and many aspects of functionality are still being discovered but we should start somewhere.
There is NO guarantee these new technologies will work without glitches but stepping aside and not actively participating in it will also not get us very far. We need to put our individual differences aside and look at all aspects including the legal landscape, so that we can truly protect and govern where necessary in order to get Malaysians ready when the digital currency revolution goes mainstream.
I’d like to specially thank Ms Nur Husna Zakaria, Dr Sherin and Dr Mohammad Ershadul Karim of University Malaya, Law Faculty, Malaysia for inviting me and organizing this round table discussion. I highly encourage other quarters (universities, government bodies and banks) to follow in their footsteps and organize such events.
I’d also like to thank some of my esteemed colleagues whom I’ve met for the very first time and some I’ve met before. I learnt a lot from you guys; Mr Rene Bernard, President (Access Blockchain Association); Mr Ng Kang Siong, Principal Researcher (Mimos); Mr Abdul Fattah, Pengerusi (Jabatan Standard Malaysia, Kementerian Sains, Teknology & Inovasi); Mr Rodney, Solicitor (Azri, Lee Swee Seng & Co); Ms Tay Kian Har, Partner (Azri, Lee Swee Seng & Co) and last but not least Mr Cris D.Tran (QRC, Plc).