The Metaverse verse is very wide. For this section, we shall focus on the overview of laws covering blockchain, cryptocurrencies and NFT (non-fungibles tokens).

I. The Laws Governing Blockchain

A blockchain is a decentralized, digitally distributed public ledger based on the nodes of a computer network. Blockchain is a form of technology and the laws governing it will essentially be premised on how the technology is used.

II. The Laws Governing Cryptocurrencies

A. Legal Tender

The only legal currencies, both notes and coins, are the ones issued by Bank Negara Malaysia, Malaysia’s Central Bank.

B. Cryptocyrrencies

  1. The two main governmental bodies in charged of regulating cryptocurrencies are the Malaysian Securities Commission (“SC”) and Bank Negara Malaysia (“BNM”).
  2. To the extent that cryptocurrencies are regarded as securities, they would be regulated under securities laws within the authority the Capital Markets and Services Act 2007, a consolidation Act for the Securities Industry Act 1983 and the Futures Industry Act 1993, under the purview of the SC.
  3. In addition, there is now in place the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019, and the Guidelines on Recognized Markets 2019 with the attendant requirements for AML/CFT controls.
  4. Under the above regulatory framework, cryptocurrencies exchanges in Malaysia are required to register with approval under the auspices of the SC. As of to-date, the four registered exchanges under the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 are Luno Malaysia Sdn Bhd, MX Global Sdn Bhd, SINEGY Technologies (M) Sdn Bhd, and Tokenize Technology (M) Sdn Bhd.
  5. On 29 Apr 2022, BNM announced the five successful applicants for the digital bank licences that secured the approval of the Minister of Finance Malaysia:

A. Lcensed under the Financial Services Act 2013 (FSA):
(i) a consortium of Boost Holdings Sdn. Bhd. and RHB Bank Berhad;
(ii) a consortium led by GXS Bank Pte. Ltd. and Kuok Brothers Sdn. Bhd; and
(iii) a consortium led by Sea Limited and YTL Digital Capital Sdn Bhd.
B. Lcensed under the Islamic Financial Services Act 2013 (IFSA):
(iv) a consortium of AEON Financial Service Co., Ltd., AEON Credit Service (M) Berhad and MoneyLion Inc.; and
(v) a consortium led by KAF Investment Bank Sdn. Bhd.

It remains to be seen whether the digital banks will affect the cryptocurrencies space.

III. Laws Governing NFTs

  1. At present, there are no specific legislation governing NFTs in Malaysia. By way of analogy, they are art pieces in digital form.
  2. However, if the NFTs space gains traction amongst the populace or bear semblance of being a security, it is not unforeseeable that the authorities may step in with laws and regulations as needed.