Summary of current blockchain related regulatory (related to government) interests in Malaysia for both financial and nonfinancial sectors

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THE WAY FORWARD FOR BLOCKCHAIN REGULATION IN MALAYSIA
M A S T U R A I S H A K
P r o g r a m m e D i r e c t o r B l o c k c h a i n @ M I G H T
Tw i t t e r : m a s t u r a i s h a k 1
m a s t u r a @ m i g h t . o r g . m y

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BLOCKCHAIN: ABOUT “TRUST” AT ARM’S LENGTH
Environmental
sustainability
Trust systems
Economic growth
Market opportunity
Technology advancement Technology focus
Talent & skills
availability
Blockchain community
Policy makers
Industry players
Start-up
Government
Policy, standard
and governance
Disruptive
business
models
Disruptive
business
models
Democratisation
of technology
Blockchain
consortiu
m
Academia & expert
Contextual
Environment
Transaction
Environment
Actors
Adapted from Kees Van der Heijden model
ELIMINATE SINGLE POINT OF FAILURE FULL AUDIT TRAIL
AUTHENTICATION
VALIDATION
CONFIDENTIALITY
INTEGRITY
AVAILABILITY
PRIVACY

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B L O C K C H A I N A S . .
3
“ S O C I A L E X P E R I M E N T ”
• C r e a t i o n o f B i t c o i n + + a s a n e f f o r t t o
b r i n g s o c i a l c h a n g e , b e g i n n i n g w i t h
f i n a n c i a l t r a n s a c t i o n s
• F o c u s o n b l o c k c h a i n c o m m u n i t i e s –
d e v e l o p e r s a n d u s e r s t o d r i v e i n n o v a t i o n
• P r i n c i p l e s o f “ d e c e n t r a l i s a t i o n ” r u l e s
C o m m u n i t y / I n d u s t r y d r i v e n d e v e l o p m e n t
• P i o n e e r s a n d e a r l y a d o p t e r s a r e g l o b a l ,
c h a m p i o n p 2 p s y s t e m , i n t r o d u c e d
f o u n d a t i o n / D e c e n t r a l i s e d A u t o n o m o u s
O r g a n i s a t i o n s ( D A O ) b a s e d d e v e l o p m e n t
• S t a r t - u p s , F o u n d a t i o n s , U N ,
g o v e r n m e n t s
• C r e a t e s i n t e r e s t s i n n e w a r e a s o f
d e v e l o p m e n t s - D A O , w e b 3 . 0 , h a s h g r a p h ,
d i s t r i b u t e d e x c h a n g e s
“ S O F T WA R E , L I N E S O F C O D E S ,
D ATA B A S E ”
• C a p i t a l i s i n g o n d e v e l o p m e n t o f B i t c o i n /
C r y p t o s i n e f f o r t t o g e t b u y - i n s f o r
e n t e r p r i s e / m a i n s t r e a m i n d u s t r y u s e
• E n t e r p r i s e u s e c a s e s -
C o n s o r t i a s – H y p e r l e d g e r , E n e r g y W e b
F o u n d a t i o n , E t h e r e u m A l l i a n c e , . .
G o v e r n m e n t s
• “ D e c e n t r a l i s a t i o n ” a s t h e s t a r t , b u s i n e s s
b a s e d .
• K e y t o m a i n s t r e a m i n g o f t e c h n o l o g y
• “ S t a n d a r d i s a t i o n ” k e y m e t r i c t o s u c c e s s

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MIGHT: Facilitating Strategic Development Of HighTech Malaysia
4
The 4th Industrial
Revolution
Sustainable
Cities
Foresight &
Futures
Thinking
BLOCKCHAIN

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MALAYSIA: RECOMMENDATIONS ON REGULATION
• C l e a r p o s i t i o n t o e n h a n c e c o u n t r y p o s i t i o n a s a b u s i n e s s - f r i e n d l y e n v i r o n m e n t b e y o n d
d i g i t a l c u r r e n c i e s .
• R e g u l a t o r y F r a m e w o r k f o r I C O s –
• C l a r i t y a n d c e r t a i n t y o n t h e l e g a l s t a t u s o f I C O t o k e n s t h a t w o u l d b e r e g u l a t e d u n d e r t h e
s e c u r i t i e s r e g u l a t i o n s
• A p p l i c a t i o n o f e x i s t i n g s e c u r i t i e s r e g u l a t o r y f r a m e w o r k w i t h c e r t a i n e x e m p t i o n s
• A n e w s p e c i f i c r e g u l a t o r y f r a m e w o r k m o d e l l e d u p o n t h e c r o w d f u n d i n g r e g u l a t o r y f r a m e w o r k
• E n f o r c e m e n t t h r o u g h c o o p e r a t i v e i n t e r n a t i o n a l e f f o r t
• A n i n t e r i m r e g u l a t o r y r e s p o n s e b y i m p l e m e n t i n g s e v e r a l s t o p - g a p m e a s u r e s
• B l o c k c h a i n f o r F i n a n c i a l I n d u s t r y
• G o v e r n i n g b o d y t o o v e r s e e D i g i t a l c u r r e n c y E x c h a n g e
• C l a r i f y w h o i s a “ r e p o r t i n g I n s t i t u t i o n ”
• W e l l d e f i n e c l a s s i f i c a t i o n o f t o k e n s a n d c r y p t o c u r r e n c i e s
• C l a r i f y t a x t r e a t m e n t o f d i g i t a l c u r r e n c y t r a n s a c t i o n s
• D a t a c o n t r o l – b e y o n d P D PA
• J o i n i n g I n t e r g o v e r n m e n t a l G r o u p o f E x p e r t s o n C o n s u m e r P r o t e c t i o n L a w a n d P o l i c y
f o r m e d u n d e r t h e U N G C P

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MALAYSIA: EARLY INITIATIVES IN DEVELOPING BLOCKCHAIN
Industry
Development
– POC for
Corporations
Industry 4.0
Blueprint
Cryptography
for
Blockchain
ISO/TC 307
TC/G/15
Blockchain &
Distributed
Ledger
Technology
Fintech
Regulatory
Sandbox
Blockchain
Hubs
Blockchains
Applied
Research
Blockchain
for Over The
Counter
market
6

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ENTITY COVERAGE Initiatives Impact
“ L e g a l Te n d e r ”
M o n e y g a m e
• F i n t e c h R e g u l a t o r y S a n d b o x – 2 0 1 6
• B N M a l e r t a n d u p d a t e l i s t
• A n t i - M o n e y L a u n d e r i n g a n d
C o u n t e r F i n a n c i n g o f Te r r o r i s m
P o l i c y f o r D i g i t a l C u r r e n c i e s
( S e c t o r 6 )
• “ A n t i - M o n e y L a u n d e r i n g a n d
C o u n t e r F i n a n c i n g o f Te r r o r i s m
( A M L / C F T ) - M o n e y S e r v i c e s
B u s i n e s s ( S e c t o r 3 )
( S u p p l e m e n t a r y D o c u m e n t N o . 1 ) ” .
F i n a n c i a l s y s t e m
s t a b i l i t y
S c a m l i s t
R e p o r t i n g I n s t i t u t i o n s
E - K Y C
E x c h a n g e s
S e c u r i t i e s
F u n d r a i s i n g
• T h e C a p i t a l M a r k e t s a n d S e r v i c e s
A c t 2 0 0 7 ( C M S A )
• A f f i n i t y I n n o v a t i o n L a b - O v e r T h e
C o u n t e r
• I n t l O r g n S e c C o m m o n I C O s
• I n d u s t r y C o n s u l t a t i o n o n t h e
i n t r o d u c t i o n o f A l t e r n a t i v e Tr a d i n g
S y s t e m ( AT S ) i n t h e M a l a y s i a n
c a p i t a l m a r k e t . J a n - M a r 2 0 1 8
Tr a n s p a r e n t
S e c u r i t i e s b a s e d
t r a n s a c t i o n s
I n d u s t r y E n g a g e m e n t
f o r P o l i c y o n c a p i t a l
m a r k e t s
MALAYSIA BLOCKCHAIN RELATED REGULATORY INTERESTS (FI)
7

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BLOCKCHAIN IN FINANCIAL SYSTEMS

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ENTITY COVERAGE Initiatives Impact
Protecting National
Competitiveness
T/C/G 15
TC307 Blockchain & DLT
Definitions
Smart Contracts
Technology Interoperability
National competitiveness
Consumer Protection • Consumer Protection (Electronic Trade Transactions)
Regulations 2012
• National Consumer Protection Policy 2002 Trade
Description Act 2011
E-Commerce
MLM
Scams
Smart Manufacturing
Industry 4.0 Blueprint Incentivisation
Use cases for National
Competitiveness
POCs – Tenaga, AirAsia
Government
Convergence of emerging technologies
for local industries
MALAYSIA BLOCKCHAIN RELATED REGULATORY INTERESTS
9

10. © MIGHT 2018. Proprietary & Confidential
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presentation as you like as long as you acknowledge the source.
BLOCKCHAIN AND STANDARDISATION ISO TC 307
4 W OR KIN G GR OU PS:
• Sec ur ity
• privac y and identity
• Smar t C ontr ac ts and its Applic ations
• Gover nanc e
2 STUDY GROUPS
• U s e C as es
• Inter oper ability

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BLOCKCHAIN: SECURITY RISKS - SCAMS
Malware hidden
in fake Bitcoin
wallets
Bitcoin phishing
Bitcoin 'flipping'
Pyramid
schemes
(MLM)
Bitcoin Mining
Investment
▪ Luring users into following links
which distribute malware
▪ Their device can be roped into
botnet
▪ User details may be compromised
▪ To mine bitcoin, you need powerful
and expensive computer
equipment
▪ Scammers will took your money
promising a return from mining
▪ Cybercriminals posing as
legitimate Bitcoin services,
impersonating brands in order to
gain trust from victims
▪ Entice users to enter their Bitcoin
keys
▪ Schemes offer to rapidly increase a
user’s investment – for a fee
Real intentions is stealing from
those naive enough to make
payments via links they’ve found on
social media
▪ Cybercriminals encourage people to
sign up to a scheme with a low
investment – then reap rewards when
they sign up new members
1

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presentation as you like as long as you acknowledge the source.
BLOCKCHAIN IN INDUSTRY 4.0

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presentation as you like as long as you acknowledge the source. 1
T H A N K Y O U
M a s t u r a I s h a k
P r o g r a m m e D i r e c t o r B l o c k c h a i n
2 3 r d J a n u a r y 2 0 1 8
A C C A M A L AY S I A
T H A N K Y O U