The Malaysian Securities Commission (SC) is seeking public feedback on proposals that allow cryptocurrency exchanges to list specific digital assets without first obtaining express approval from regulators.
According to a Monday announcement, regulators are considering liberalizing a framework for listing several digital assets in exchange. The proposed rules allow digital assets that meet certain criteria to be listed without explicit approval.
“This is aimed at accelerating time to market, increasing operator accountability and increasing product availability,” the announcement said.
The new rules hold exchanges liability for decisions to list specific assets. The listed digital assets must undergo security audits with publicly available results and must be traded on a platform compliant with the Financial Conduct Task Force for at least one year.
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Which assets could be approved?
SC also seeks industry input as to whether certain types of assets deemed at risk should be permitted to trade. These include privacy coins such as Monero (XMR). This coin has increased design privacy.
“The lack of transparency aspects in certain digital assets can appeal to individuals involved in illegal activities and increase the risk of money laundering and terrorist financing.”
Other assets that regulators seek comment are “intended to follow internet trends and popular culture,” more commonly known as Memecoins. In this case, the problem is increased volatility.
Regulators are asking for input on assets with low market demand, such as “new utility tokens.”
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Governance and custody rules have been strengthened
SC also proposed reworking the security and governance requirements of client assets. Digital exchange operators are subject to stricter rules, including requirements for the separation of user assets.
Crypto exchanges must meet new minimum financial standards, including policies and procedures to mitigate the risk of loss or misuse of user funds and to encourage repayment in the event of bankruptcy. Under the new rules, these agencies will also require senior management members resident in Malaysia to be responsible for the management of their wallets.
“This is related to reducing the risk of loss or misuse of client assets and driving digital assets movement.”
Finally, Crypto exchanges the custody user assets for registration as custodians of digital assets or for services to custodians registered with SC.
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