The deputy minister of Malaysia's Communications and Multimedia Ministry thinks crypto should be legal tender in the country. What could go wrong?
“We hope the government can allow this," Zahidi Zainul Abidin said in Parliament on Monday when responding to a question about the government's take on NFT marketplaces,
reported. "We are trying to see how we can legalize this so that we can develop youth participation in crypto and assist them."
Zahidi said Malaysia's Finance Ministry would be responsible for regulating crypto as would institutions like its central bank and the Securities Commission, but he didn't say how his ministry would be involved in crypto. The central bank hasn't laid out a formal stance on the issue, although it told Bloomberg in January that it's looking to introduce a central bank digital currency or CBDC for short. Malaysia is part of Project Dunbar , which is testing the use of CBDCs alongside a few other countries.
While Zahidi wants to go full speed ahead on crypto, the country's finance minister — you know, the person who would actually oversee regulations — is decidedly less bullish. Tengku Datuk Seri Zafrul Tengku Abdul Aziz said earlier this month that crypto is not a "good store of value and a medium of exchange" because of its volatility. That isn't exactly a resounding endorsement for the country turning to crypto as legal tender anytime soon, despite Zahidi's desire to assist the crypto-loving youth.
A number of countries have legalized crypto, with Ukraine being the latest . But all countries save one have stopped short of adopting crypto as legal tender, instead only providing a regulatory framework for digital assets. El Salvador is the only country to make crypto legal tender. The country made bitcoin legal tender in a splashy announcement, including that it would use geothermal energy from a volcano to mine the cryptocurrency.
The launch, though, got off to a
as the price of bitcoin dipped. The country's digital wallet, Chivo, wasn't available on several app stores at launch. A deep dive by
Rest of World
found that glitches have continued to plague Chivo in the months since El Salvador leaned into bitcoin, and independent polling and analyses indicate most of the country's businesses have yet to process bitcoin transactions.
Malaysia has recently run into problems with bitcoin mining in the country. Police in the country said bitcoin miners
about $2 million in electricity during 2020 alone. Stealing power for bitcoin mining is already a prevalent
in the country, where the practice is illegal.
But despite the challenges, countries are continuing to forge ahead with looking at digital currencies. The U.S. is looking into crypto, too. The Biden administration recently outlined a plan for digital assets that includes a study on the impact of crypto and a call for the Commerce Department to develop a framework for crypto.