Malaysia’s deputy finance minister says cryptocurrencies, such as bitcoin and ethereum, are not suitable as a means of payment or store of value. Although digital assets are not recognized as legal tender in Malaysia, the finance ministry official said they are an asset class that can be invested in.
Deputy Minister of Finance for Cryptocurrency in Malaysia
Malaysian Deputy Finance Minister Yamani Hafez Musa spoke about the cryptocurrency on Thursday in response to a question raised by MP Nurul Izzah Anwar to Dewan Rakyat, The Star reported. The member of parliament asked about the government’s role in monitoring and regulating cryptocurrency.
Noting that cryptocurrencies are not a central bank regulated payment instrument, Bank Negara Malaysia, the deputy finance minister said:
Digital assets such as bitcoin and ethereum are not suitable for use as a means of payment … 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 are exposed to volatility as a result of speculative investments,” he added. The deputy finance minister also explained that cryptocurrencies are not suitable as a means of payment because “they do not show the characteristics of money”.
He went on to discuss several issues he sees with cryptocurrency, including its volatility, the risk of theft, cyber attacks, and its inability to process as many transactions as there are current Visa payment systems. Additionally, he raised concerns regarding the environmental impact of cryptocurrency mining, stating:
Furthermore, what’s important is the huge impact on the environment because the electricity used to process a bitcoin transaction can process 1.2 million Visa transactions.
Energy usage of bitcoin has been a controversial topic, including the claim that bitcoin transactions use far more energy than Visa transactions.
Nic Carter of Castle Island Ventures explained that the comparison between the use of energy in bitcoin transactions and that of Visa transactions “is based on many misunderstandings of Bitcoin”. He detailed: “In short, the Visa versus Bitcoin comparison is wildly off-base. It’s a melee-koala comparison. Visa is a payments network that ultimately relies on the underlying financial infrastructure. Bitcoin is the financial infrastructure. It is a full stack monetary network ”.
Additionally, in May last year, Galaxy Digital released a report showing that the banking system uses much more energy than bitcoin.
Although digital assets are not recognized as legal tender in Malaysia, the finance ministry official said they still have many different uses, including as an asset class that can be invested in. He noted that the country’s Securities Commission has defined crypto assets as securities under its law and the regulator is currently overseeing cryptocurrency trading activities in the country.
Furthermore, the Deputy Minister of Finance affirmed that “the existing monetary policy instruments and finances remain effective even in maintaining monetary stability and the country’s finances”.
Meanwhile, Malaysia has cracked down on illegal cryptocurrency mining activities. In December, Malaysian police stopped a cryptocurrency mining operation and seized 1,720 bitcoin mining machines in a crackdown on electricity theft. In July last year, the authority destroyed over 1,000 bitcoin mining machines with a steamroller.
What do you think of the comments from Malaysia’s Deputy Finance Minister on cryptocurrency? Let us know in the comments section below.
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