Malaysia is one of the most recent countries to look at its current regulatory guidelines and come up with changes to take part of the FinTech revolution. Keeping in mind how Bitcoin is a part of FinTech as well, these changes will have a rippling effect on cryptocurrency adoption.
FinTech Regulation is a Double-edged Sword
Various countries around the world are taking a closer look at their financial regulatory guidelines to see how they can be adjusted to accommodate the FinTech revolution. No one wants to be left out of the race to become a market leader in financial technology, yet the majority of regulations do not require much innovation in this sector.
Financial innovation is bound by specific guidelines and rules, most of which were created several decades ago. As one would come to expect, these rules have not been adapted to suit more modern needs, and legislation is moving slowly towards new solutions. Luckily, some governments are open-minded when it comes to FinTech, and take matters into their own hands.
The governor of Bank Negara Malaysia mentioned the great benefits in bringing FinTech to Islamic finance. At the same time, Muhammad Ibrahim made a note of how regulators need to guard against certain risks present in the FinTech sector. Any form of innovation — particularly in the financial sector — is always greeted with a fair amount of skepticism, before it is either embraced or rejected altogether.
Very few people keep tabs on Islamic finance, despite the recent launch of the online sharia-compliant Investment Account Platform. Moreover, this investment platform is set up by six Malaysian banks, and backed by the local government. Its primary purpose is to serve as a central marketplace for financing smaller businesses.
Bank Negara Malaysia Governor Muhammad Ibrahim continued by stating:
“Investment Account Platform is the first Islamic banking-intermediated internet-based platform that combines the expertise of Islamic banks and efficiency of technology to channel funds from investors to viable economic ventures.”
Touching upon the subject of risks brought to the table by FinTech, Ibrahim briefly referred to cybersecurity without going into details. Additionally, the central bank is looking at proposing additional guidance to ensure regulatory guidelines can handle these challenges posed by financial innovation. However, the primary purpose is to stimulate productive innovation, which helps drive down costs and improve the quality of service to consumers.
Although this process will take several months — if not years — to complete, the news is positive for FinTech startups in Malaysia. Bitcoin companies in the region will rejoice as well, as any financial regulation changes will also have an impact on their operations.
Which changes do you hope to see in the Malaysian financial regulatory landscape? Let us know in the comments below!
Source: Finance Magnates
Images courtesy of Shutterstock, Muhammad Ibrahim.