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The Malaysian government has announced that they will not recognize cryptocurrencies as payment instruments.
Malaysian Deputy Finance Minister Yamani Hafez Musa believes that bitcoin, ether and other digital assets are not suitable for settlements and payments, and cannot be considered an effective way to save money. This is due to the high volatility of cryptocurrencies and the use for market speculation, the deputy minister explained. He cited as an example the situation when in April 2021 the bitcoin exchange rate exceeded $64,500, but the next week it collapsed by almost 50%. Musa insists that, unlike regular money, cryptocurrencies are at risk of theft. The official refers to the statistics of analytical companies. Hackers managed to steal $1.4 billion worth of crypto assets from DeFi projects last year, according to The Block.
Speaking about Bitcoin, Musa cited the network’s low bandwidth as one of its main weaknesses. Bitcoin can only process 10 transactions per second, while current payment systems like Visa process around 65,000 transactions per second. The possible negative impact of cryptocurrencies on the environment is another reason why the official does not support their use. According to him, the amount of electricity used to process one bitcoin transaction is enough to process 1.2 million Visa transactions. In addition, in 2020, the Bitcoin network used 132 terawatts per hour, which is equivalent to the power consumption of the whole of Argentina, Musa said.
When asked about the government’s plans to create its own digital currency for international money transfers, Musa said that right now the Central Bank of Malaysia has not yet made a decision to launch a state-owned stablecoin. Although last year, Bank Negara Malaysia (BNM) became a participant in the pilot “Project Dunbar”, a project to test government cryptocurrencies. The Deputy Minister of Finance explained that the country’s domestic payment systems operate quickly and safely, meeting the economic needs of Malaysia. Monetary policy instruments are also proving their effectiveness and maintaining the stability of the country’s financial market, so there is no urgent need to launch a digital currency of the central bank so far.
Recall that in 2019, Malaysia began to regulate tokens and other cryptocurrencies as securities, so virtual asset service providers (VASPs) must obtain permission to operate in the country from the Malaysian Securities Commission.
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