Government of Malaysia believes crypto is not a suitable currency because of its inherent volatility.
On Thursday, the Malaysian Parliament held discussions about cryptocurrencies’ use cases and CBDC.
Deputy Finance Minister, Yamani Hafez Musa, talked about crypto’s use case as money, in a reply to a question raised by a fellow Member of Parliament, Nurul Izzah Anwar in Dewan Rakyat, reported by The Star.
Izzah had asked about the Government’s role in monitoring and regulating currency and crypto-assets.
“Digital assets such as bitcoin and Ethereum are not suitable to be used as a payment instrument as these assets do not exhibit characteristics of money,” Hafez answered.
“In general, digital assets are not a store of value and a good medium of exchange. This is due to the state of digital assets which is exposed to volatility as a result of speculative investments,” he added.
So, Hafez rejected the idea of adopting crypto as legal tender.
Izzah also asked if the Government had any plans of creating a digital currency, given Bank Negara’s involvement in Project Dumbar – an initiative involving cross-border money transfers using blockchain technology.
Hafez explained that Bank Negara has not decided to issue a Central Bank Digital Currency (CBDC) as Malaysia’s current domestic payment systems including the Real-time Retail Payments Platform continues to operate safely and efficiently, and also allows real-time digital payments.
“Additionally, the monetary policy tools and existing finances also remain effective in maintaining monetary stability and the country’s finances,” he said.
Hafez further explained that the Securities Commission (SC), as the market regulator of Malaysia, has categorized digital assets or crypto as a security under the law and is responsible for regulating its trading activities.
Volatility is an exasperating quality of crypto assets when it comes to using them as a currency. To circumvent that, stablecoins arrived on the scene. Many regulators believe that stablecoins pose a greater threat to their sovereignty than the traditional volatile crypto assets as the former’s inherent stability positions it as a replacement to fiat currency.
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