Malaysia’s Central Bank Warns of Bitcoin Risks; Stops Short of Banning the Virtual Currency
January 5, 2014 Leave a comment
Malaysia’s Central Bank Warns of Bitcoin Risks
Stops Short of Banning the Virtual Currency
SHIE-LYNN LIM
Jan. 3, 2014 12:14 p.m. ET
KUALA LUMPUR, Malaysia—Joining a number of regulators world-wide, Malaysia’s central bank voiced concern about bitcoin on Friday but stopped short of banning the virtual currency.“The Bitcoin is not recognized as legal tender in Malaysia,” Bank Negara Malaysia said in an announcement. “The public is therefore advised to be cautious of the risks associated with the usage of such digital currency.”
The announcement by the central bank of the Southeast Asian country highlighted regulatory fears about bitcoin and the lack of legal protection for ordinary people as the virtual money exists only in cyberspace and isn’t backed by any central bank or government.
From Britain to China and Thailand, central bank officials have voiced concerns about the potential for money laundering and potential for speculative trading. Chinese regulators, alarmed at bitcoin’s potential to skirt the country’s capital controls, took a hard line last month and banned third-party payment service providers from using bitcoin for transactions.
The clampdown in China may have taken the wind out of bitcoin’s rise in value, but demand for the virtual currency is still rising, particularly in markets where consumers are increasingly turning to mobile devices and computers for online purchases.
In Malaysia’s southern neighbor, Singapore, 16 retailers accept the cryptocurrency, according to CoinMap, a website that tracks physical companies and vendors accepting bitcoin.
Malaysia’s sole merchant listed on CoinMap is shared workspace Nook Malaysia. Proprietor Daniel Yap has allowed customers to pay for everything from a cup of coffee to office services in bitcoin since November.
“There is huge potential in bitcoin in spite of the negative flak,” Mr. Yap said. “We view this payment option just as how we view barter trade. It isn’t regulated, but it can be accepted. So why not the same for Bitcoins?”
Colbert Lau, a co-founder at cryptocurrency firm Bitcoin Malaysia remains unfazed by the central bank stance, saying in an email that it was “worth noting that BNM, in its statement, didn’t outlaw the usage of bitcoin or state that bitcoin was illegal.”
The value of bitcoin is down from an all-time high of $1,233 in December to $846.80 during local hours on Jan. 3. Over a year ago, one bitcoin sold at $13.50, according to Tokyo-based Bitcoin exchange website MtGox.
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