Securities Commission: Crypto ATMs are Digital Asset Exchanges

The Securities Commission Malaysia (‘SC’) issued a media release on 8 July 2020 warning that Crypto Automatic Teller Machines (‘Crypto ATM’) are considered as Digital Asset Exchanges and may only be operated by entities which are registered with the SC under its Guidelines on Recognised Markets (‘Guidelines’). The SC added that it has thus far not authorised any entity to operate Crypto ATMs.
 
According to the SC, a Crypto ATM is a machine that allows individuals to buy and/or sell digital assets via cash, debit/credit cards or e-wallets and facilitates the exchange of digital assets with fiat currency and vice versa.
 
The SC also cautioned that members of the public who deal with unlicensed or unauthorised entities or individuals are not protected under Malaysian securities laws and are exposed to various risks such as fraud and money laundering.
 
It should also be noted that cryptocurrencies are not recognised as legal tender by Bank Negara Malaysia.
 
Comment
 
A Digital Asset Exchange is defined in the Guidelines an electronic platform which facilitates the trading of a digital asset.  In taking the position that a Crypto ATM is a digital asset exchange, the SC must have been satisfied that a Crypto ATM is an electronic platform and thus the buying and selling of digital assets and the exchanging of digital assets for fiat currency and vice versa through a Crypto ATM would constitute trading of a digital asset.
 
An article on the framework for digital asset exchanges in Malaysia is available here.