Securities Commission Malaysia Hosted the Sixth Edition of the SCxSC Fintech Conference on Oct 22

The Securities Commission Malaysia (SC)  hosted the sixth edition of the SCxSC Fintech Conference on October 22, an event aimed at helping to scale up the nation’s Fintech industry. 

Notably, Malaysia’s Fintech sector has seen several new players enter its ecosystem, following the regulatory agency’s move to provide more opportunities for under-served segments including micro, small and medium-sized enterprises (MSMEs) and a new generation of potential investors to raise funds or fulfill their financial goals.

For the past five years, the SCxSC has been providing a platform for local policymakers, entrepreneurs, investors and financial services firms to collaborate on innovative projects in finance through the adoption of the latest technologies. 

The nation’s Fintech sector now includes alternative market-based financing platforms such as equity crowdfunding (ECF) and peer-to-peer financing (P2P). Malaysia’s Fintech industry is also home to various Fintech startups such as digital investment consultants, crypto exchanges and real estate crowdfunding managers. 

At present, the nation has 21 ECF and P2P platforms that are registered with the SC, and have have raised a total of RM587 million (appr. $140.2 million) for over 1600 MSMEs.

Datuk Syed Zaid Albar, chairman of the SC, stated:

“We are pleased to note that these platforms continue to serve a number of MSME sectors including high tech, education, retail, F&B and consumer product; and have attracted many new investors, especially young investors aged 35 and below.”

Albar also noted that the nation’s government has, under Budget 2020, set aside RM50 million (appr. $12 million) for the Malaysia Co-Investment Fund (MyCIF), in order to provide financing for local startups and SMEs by making joint investments on a “one-to-four basis” in campaigns that are active on ECF and P2P platforms. 

An additional RM10 million (appr. $2.4 million) has been set aside for the MyCIF under Budget 2020, specifically for social enterprises to generate funds through local P2P financing platforms.

Datuk Syed Zaid added:

“We expect this injection of funds to further spur the growth of our ECF and P2P financing industry, which in turn could catalyze growth in Malaysian MSMEs byproviding access to alternative sources of financing.”

The SCxSC 2019 attracted over 800 participants who were given the opportunity to meet with global Fintech experts, including Eli Broverman, co-founder of robo-advisor Betterment, and Jeffrey Cruttenden, co-founder of Acorns, a major change investment platform. 

Topics discussed during the two-day event included Fintech entrepreneurship, digital identity verification, crypto assets, Islamic Fintech, and the application of artificial intelligence in cybersecurity.

The SCxSC Fintech Conference 2019 has been supported by Rakuten Trade, Malaysia Digital Economy Corporation (MDEC) and Permodalan Nasional Berhad. 

For additional information regarding the SCxSC Fintech Conference, you can visit the scxsc.my website.

The Securities Commission Malaysia Approves EdgeProp as First Property Crowdfunding Platform in Malaysia

The Securities Commission Malaysia (SC) has registered EdgeProp Sdn Bhd as the first “Recognised Market Operator” to establish and operate a property crowdfunding platform in Malaysia. EdgeProp was granted an approval in principle in September 2019.

EdgeProp currently provides a portfolio of services for the property/rental market in Malaysia, including valuations and other data points. The addition of providing a financing solution for qualified properties should fit well into existing platform services.

In May of 2019, SC updated the rules pertaining to online capital formation seeking to better encourage the emerging ecosystem. At that time, SC chairman Datuk Syed Zaid Albar explained that they will continue to facilitate the development of innovative digital solutions which democratizes access to investments while broadening financing options available for all Malaysians.

“The introduction of ECF [equity crowdfunding] and P2P [peer to peer] financing provides an alternative source of capital for MSMEs to fund business expansion, finance working capital and meet other financial requirements,” stated Zaid.

“Property Crowdfunding” or PCF is an initiative announced in the 2019 Budget to provide an alternative financing avenue for first-time homebuyers through a property crowdfunding scheme. The Commission believes that property crowdfunding offers the same potential as that of equity crowdfunding and peer to peer financing platforms in providing an alternative source of financing. PCF is specifically tailored for first-time homebuyers. The Commission also believes that investors will benefit by accessing a new asset class.

Malaysia persists as a forward-thinking jurisdiction when it comes to Fintech including crowdfunding and peer to peer lending. In June of 2019, SC approved three regulated digital asset exchanges.

The SC specifically noted that it is an offense under the securities laws to operate a crowdfunding platform without authorization from the SC.

A list of approved market operators is available here. As of today, the following platforms are registered to operate in Malaysia.

General

  • Bay Supply Chain Technology Sdn Bhd
  • Bursa Malaysia Bonds Sdn Bhd
  • Citibank Berhad

Equity Crowdfunding (ECF)

  • 1337 Ventures Sdn Bhd
  • Ata Plus Sdn Bhd
  • Crowdo Malaysia Sdn Bhd
  • Ethis Ventures Sdn Bhd
  • Eureeca SEA Sdn Bhd
  • FBM Crowdtech Sdn Bhd
  • Fundnel Technologies Sdn Bhd
  • MyStartr Sdn Bhd
  • Pitch Platforms Sdn Bhd
  • Crowdplus Sdn Bhd

Peer-to-Peer Financing (P2P)

  • Bay Smart Capital Ventures Sdn Bhd
  • B2B Finpal Sdn Bhd
  • Capsphere Services Sdn Bhd
  • Crowd Sense Sdn Bhd
  • Ethis Kapital Sdn Bhd
  • FBM Crowdtech Sdn Bhd
  • MicroLEAP PLT
  • Modalku Ventures Sdn Bhd
  • Moneysave (M) Sdn Bhd
  • Peoplender Sdn Bhd
  • QuicKash Malaysia Sdn Bhd

Digital Asset Exchange (DAX)

  • Luno Malaysia Sdn Bhd
  • SINEGY Technologies (M) Sdn Bhd
  • Tokenize Technology (M) Sdn Bhd

Property Crowdfunding (PCF)

  • EdgeProp Sdn Bhd

Securities Commission Malaysia Issues Another Warning for Investors in Unauthorized ICOs and Digital Asset Exchanges

The Securities Commission Malaysia (SC) is out with another warning cautioning investors about initial coin offerings and digital asset exchanges which have not been authorized. The SC says they have seen an increase in both complaints and queries from the public about these crypto offerings.

“The SC advises the public to be wary of any persons offering ICOs. The SC has not authorized any ICOs pending the finalization of its guidelines,” states the SC.

The SC reaffirms that any digital asset offering, including ICOs, requires regulatory approval first.

The SC issued updated rules regulating digital assets in January 2019.

The SC would like to remind investors to be mindful of the potential risks associated with ICO schemes, notably:

  • an ICO issuer not having a physical presence in Malaysia would make it
    difficult to verify the authenticity of the ICO. Further, the recovery of invested
    monies may be subject to foreign laws or regulations;
  • the involvement of unauthorized individuals heightens the risk and exposure
    to fraud, money laundering, and terrorist financing;
  • the ICO may be structured in such a way as to limit the legal protection and
    recourse for the investors against an ICO issuer; and
  • cyber-security risks including hacking and stealing of online personal
    information.

The digital asset sector has experienced rampant acts of fraud. Fraudulent ICO issuers have been widely documented. Crypto exchanges have experienced multiple scams and hacks.

Even though a platform may call itself an “exchange,” this does not mean it has been authorized by the SC.

On June 4, 2019, the SC registered three Recognized Market Operators (RMOs) to establish and operate DAX in Malaysia.

These three DAX operators, namely Luno Malaysia Sdn Bhd, SINEGY Technologies (M) Sdn Bhd, Tokenize Technology (M) Sdn Bhd. The trio has been given nine months to fully comply with all regulatory requirements.

There are currently no other authorized crypto exchanges operating in Malaysia.

All other crypto exchanges have been told to “immediately cease all activities related to the trading
of digital assets and return all monies and assets collected from investors.”

This also applies to operators who were under the SC’s initial transitional period list.

Persons in breach of the rules may be liable to a fine or imprisonment term not exceeding ten years or both.

Members of the public may verify if a digital asset operator is registered with the SC
at https://www.sc.com.my/development/digital/digitalassets.

 

Securities Commission Malaysia Promotes Financing Opportunities for Small Business Including Crowdfunding, P2P Lending

Capital Markets Malaysia, an affiliate of the Securities Commission Malaysia (SC), hosted an event to generate greater awareness of capital raising and investment opportunities in the Malaysian capital market.

The target audience was micro, small-and-medium enterprises (MSMEs); and entrepreneurs. The half-day forum focused on how Malaysian businesses can tap into the full spectrum of capital market funding solutions from IPOs and bonds to alternative market-based financing, including equity crowdfunding and peer-to-peer (P2P) financing to fund and expand their business operations.

SC Deputy Chief Executive, Datuk Zainal Izlan Zainal Abidin, said their priority is to broaden access to investing and financing opportunities, particularly for segments which traditionally have been under-served, and encourage greater participation with the aim of building an inclusive capital market.

According to the SC, a key focus is the development of small businesses which contribute more than 37% of GDP. Yet, these same small businesses remain underserved.

SC has a reputation for promoting Fintech innovation and supports the “digitisation to meet the financing needs of MSMEs and attract a new generation of investors.”

SC reports that crowdfunding and P2P financing platforms have thus far helped over 900 SMEs collectively raise close to RM350 million for their business expansion in the past three years.

Securities Commission Malaysia Approves Three Digital Asset Exchanges

The Securities Commission Malaysia (SC) has approved three digital asset exchanges as “Recognized Market Operators” (RMOs) to establish and operate digital asset exchanges (DAX) in Malaysia.

Malaysia is known for its support of Fintech innovation in general and recently updated online capital formation rules to boost utilization of investment crowdfunding.

The shift to digital assets is occurring globally as policymakers hash through how to best manage the fundamental change in financial services.

The SC updated their “Guidelines on Recognized Markets” to facilitate the trading of digital assets in January and augmented the rules this past March. At that same time, the SC required existing DAXs to submit an application for approval during a “transitional period” as the industry moved from unregulated to a compliant one.

The Malaysia Guidelines on Recognized Markets were amended in May.

The three newly registered DAX operators are as follows:

  • Luno Malaysia Sdn Bhd
  • SINEGY Technologies (M) Sdn Bhd
  • Tokenize Technology (M) Sdn Bhd.

The SC added that it has given the three new RMOs up to nine months to fully comply with all regulatory requirements.

DAX operators who have not been approved by the SC are required to cease all activities immediately and return all monies and assets collected from investors.

The SC said that operating a DAX without regulatory approval is in breach of securities law and individuals may be liable for imprisonment, a fine or both.

The SC also cautioned the investing public of the risk intrinsic to digital assets – especially utilizing a non-registered exchange.

The public may verify whether or not a DAX is approved in Malaysia by visiting the SC website.

Malaysia Updates Crowdfunding Framework, Securities Commission Malaysia Affirms its Support for Fintech

The Securities Commission Malaysia (SC) has updated crowdfunding rules to better fit the emerging market of online capital formation while announcing the approval of multiple new platforms targeting different sectors of digital finance.

During a routable organized by the SC which included the participation of representatives from the Fintech industry,  the Malaysian Minister of Finance YB Tuan Lim Guan Eng met with the stakeholders indicating government support.

According to a release by the SEC, the roundtable discussed the progress of the Fintech industry in fostering digital innovation to meet the financing needs of micro, small and medium enterprises (MSMEs). Additionally, the topic of enabling greater financial inclusion for both issuers and investors was reviewed.

SC chairman Datuk Syed Zaid Albar said the SC will continue to facilitate the development of innovative digital solutions which democratizes access to investments while broadening financing options available for all Malaysians.

“The introduction of ECF [equity crowdfunding] and P2P [peer to peer] financing provides an alternative source of capital for MSMEs to fund business expansion, finance working capital and meet other financial requirements,” said Zaid.

At the beginning of the roundtable, the SC announced eight new “Recognized Market Operators” comprising three equity crowdfunding (ECF) and five peer-to-peer (P2P) financing platforms.

With the addition of the new platforms, each expecting to go live before the end of the year, there are now 21 market-based financing platform operators registered in Malaysia.

The SC reports that as of March 2019, the ECF and P2P financing market has provided close to RM350 million (approximately USD $84 million) of alternative financing for nearly 900 Malaysian MSMEs.

The SC also released a new property crowdfunding framework following amendments made to its Guidelines on Recognized Markets. This is pursuant to an initiative announced in Budget 2019 to provide an alternative financing avenue for first-time homebuyers.

Property crowdfunding offers the same potential as that of ECF and P2P financing platforms in providing an alternative source of financing but is designed to support first-time homebuyers. At the same time, the SC states that it will provide investors access to a new investment option.

The revised guidelines include new obligations for a property crowdfunding platform operator. These include minimum shareholders’ funds of RM10 million (about USD $2.4 million); an obligation to provide fair, clear and timely information to both homebuyers and investors prior to participating in a property crowdfunding campaign; and exit certainty at the end of the agreed time frame.

The property crowdfunding framework was issued after taking into consideration, among others, feedback and input from members of the public including industry players during a recent public consultation by the SC. Malaysia has long pursued innovations in finance and is a country that has been very supportive of Fintech from a policy perspective.

 

Consultation: Malaysia Seeks Feedback on Proposed ICO Framework

The Securities Commission Malaysia (SC) has published a consultation on a framework for Initial Coin Offerings (ICOs). The SC is one of many financial regulators that are seeking to better understand digital assets while investigating potential regulatory environments to create an effective ecosystem.

The SC consultation paper discusses the proposed framework for, among others, the eligibility of issuers, the need for transparent and adequate disclosures as well as utilisation of proceeds of COs.

The SC states that blockchain and digital assets may be able to enhance efficiencies in the capital market including lowering post-trade latency and counterparty risks. Additionally, digital assets may be able to enable “seamless regulatory reporting and compliance.”

The regulator recognizes that digital assets can act as an alternative asset class for investors and as part of their remit is to promote the development of capital markets they are pursuing a regulatory framework that attempts balance innovation and investor protection.

The public may submit their comments to CPLawReform@seccom.com.my until 29 March 2019.


Securities Commission Malaysia Discusses 2018 Annual Report & Plans for Capital Market Ecosystem, Alternative Funding Raises USD $197.7 Million

According to the Securities Commission Malaysia in conjunction with the release of its 2018 Annual Report, the Malaysian capital market continued to play a key role in financing the economy against a backdrop of challenging global market conditions.

“Though occasionally tempered by uncertainties stemming from rising trade tensions and tightening global financial conditions, all segments of the Malaysian capital market remained resilient, which is a testament to the safeguards implemented by policymakers and market participants,” elaborated SC Chair Datuk Syed Zaid Albar. “On our part, the SC needs to continue being progressive, collaborative, open in discussions and proactive in our approach with all stakeholders. Ultimately, the SC must act as a catalyst to help the market evolve.”

The size of the capital market reportedly remained above RM3 trillion as at end 2018, with the bond market growing by 8.8% to RM1.4 trillion while equity market capitalization contracted by 10.8% to RM1.7 trillion. Meanwhile, the fund management industry had RM743.6 billion in assets under management, and the unit trust industry recorded net asset value of RM426.18 billion in 2018.

The capital market continued to be a key source of financing for the economy, with total funds raised amounting to RM114.6 billion.

Alternative fundraising channels, namely venture capital, private equity, equity crowdfunding, and P2P financing, raised RM 808.4  million (USD $197.7 million) in funding, illustrating the capital market’s ability to play a significant role in the funding needs of underserved issuers such as micro, small and medium enterprises.

According to the report, Malaysia remained a global leader in the Islamic capital market (ICM) with RM1.9 trillion in Shariah-compliant equities and sukuk outstanding. Malaysia also continued to be the world’s largest sukuk market.

[easy-tweet tweet=”.@SecComMY Releases 2018 Annual Report, Shares Capital Market Plans for 2019 #fintech #Malaysia” template=”light”]

Building on Malaysia’s strength in the Islamic capital market, the SC continued to lead initiatives to establish Malaysia as a regional leader for Sustainable and Responsible Investment (SRI) in 2018. Following the issuance of the world’s first green sukuk in Malaysia in 2017, the SC established a RM6 million Green SRI Sukuk Grant Scheme in 2018 to incentivize issuers by offsetting up to 90% of external review costs incurred in relation to the issuance of green SRI sukuk. Four applications have since been approved, supporting RM2.2 billion in funds raised to facilitate the financing of projects that benefit the environment and society.

To meet the demands for convenient and affordable investment products and services, the SC licensed Malaysia’s first digital investment manager in 2018. Building upon the strong momentum in facilitating inclusive and sustainable growth, additional Fintech providers including ECF, P2P & digital asset exchange operators and digital investment managers are expected to be operational in 2019.

The SC noted that it had also broadened retail access to the bond and sukuk markets by liberalizing regulatory requirements for primary issuances and introducing a seasoning framework to allow retail access to existing corporate bonds and sukuk. Measures were also introduced in 2018 to encourage equities trading, including liberalising rules on margin financing and intraday short selling.

According to the report, Malaysia emerged as the biggest gainer among 12 Asian markets for its corporate governance standard, moving from sixth to fourth position in the biennial 2018 Corporate Governance Watch regional survey undertaken by the Asian CorporateGovernance Association. The survey commended the SC’s consistent efforts and use of innovative approaches to promote corporate governance reforms.

The SC also emphasized high standards of market conduct through its supervision and surveillance efforts. In 2018, the SC conducted thematic reviews on several areas of risk such as fair and orderly trading, market liquidity and anti-money laundering. Where misconduct was identified, the SC deployed a range of enforcement tools under its administrative, civil and criminal powers, resulting in sanctions which included, among others, over RM30 million in disgorgement and fines.

[easy-tweet tweet=”‘On our part, the SC needs to continue being progressive, collaborative, open in discussions and proactive in our approach with all stakeholders. Ultimately, the SC must act as a catalyst to help the market evolve…’ @SecComMY” template=”light”]

Building on these foundations, the SC said that it would continue to pursue an inclusive and sustainable growth agenda while facilitating innovation and improving regulatory efficiency. In sharing his vision for the capital market for the next three years, Datuk Syed Zaid Albar spoke on the need to develop a capital market and regulatory institution that are accessible, agile and accountable.

“To ensure inclusive and sustainable growth of our economy moving forward, the capital market must be accessible to the full spectrum of issuers, investors and intermediaries. It must also be agile and evolve in response to changes in the economic landscape as well as user demands. Greater access and flexibility must, however, be accompanied by higher accountability. We will continue to raise standards of governance and conduct, both for issuers and intermediaries in the capital market.”

During 2019 the SC will focus on:

  • Strengthening alternative financing avenues to meet the funding needs of micro, small and mid-sized companies
  • Facilitating digital investment models to attract wider investor participation
  • Expanding and harnessing synergies between ICM and sustainable finance to attract a wider range of issuers and investors
  • Reviewing the entire primary market framework, including the approach to approving IPOs
  • Improving investor experience by digitizing the broking value chain
  • Reviewing the licensing framework for better flexibility and responsiveness to new intermediation models
  • Strengthening the CG ecosystem by focusing on board composition, shareholder activism and intermediary governance
  • Strengthening supervision and surveillance in areas of risk, particularly with growing prominence of digital assets and trading strategies

Securities Commission Malaysia Orders Immediate Halt to LavidaCoin Initial Coin Offering

Following a notice from Securities Commission Malaysia last week that LavidaCoin may be in breach of securities law, the Commission has issued a notice for LavidaCoin to immediately halt the initial coin offering (ICO).

Securities Commission Malaysia stated the promoter must cease all activities regarding the promotion of LavidaCoin pending review by the SC.

DSV Crypto Club, LUX Galaxies, and VI Profit Galaxy, who were found to be promoting LavidaCoin, were also added to the SC’s Investor Alert List.

The LavidaCoin ICO was seeking to raise $1.5 billion to fund a plethora of activities including a wallet, an exchange, a payment gateway (LavidaPay) and a media entity. LavidaCoin was created by a well known Malaysian socialite who called the LavidaCoin the “step mother of coin.” Datuk Seri Vida, or Datuk Seri Dr Hasmida Othma, had entered popular Malay culture with a polished rags to riches story that captured the interest of the country.

The ICO is similar to many other offerings that is full of exciting predictions of success based on little more than hyperbole and hubris. One recent report referencing LavidaCoin stated the offering “will go down as one of the worst ICO projects in Malaysia.”

Brief: Securities Commission Malaysia Tells Lendingstar to Cease All Activities Immediately

The Securities Commission Malaysia (SC) has directed Lendingstar Malaysia Sdn Bhd to cease all its activities, pronto, effective today. The SC directive was initially issued on 23 July 2018 after an inquiry found that Lendingstar is not registered to operate a recognized market and is providing auto invest facilities without license or registration from the SC, as required under the securities law.

Crowdfund Insider reached out to LendingStar Founder and CEO Slava Artamonov for further comment. The company has not yet addressed the SC’s request on social media or on its website.

[clickToTweet tweet=”Securities Commission Malaysia Issues Cease Order @lendingstar” quote=”Securities Commission Malaysia Issues Cease Order @lendingstar”]

To date, the SC has registered seven equity crowdfunding and six peer-to-peer platform operators –investors may access the full list of registered platform operators here.  Registered crowdfunding platforms include Ata Plus, Crowdo Malaysia, Eureeca SEA, FBM Crowdtech, Funnel Technologies, Pitch Platforms and Propellar Crowdplus.

LendingStar Exchange (LSX), a company registered in Singapore but that operated in Malaysia had claimed to be the world’s first invoice trading platform based on Blockchain, came on the scene in 2017 and kicked off an ICO in October 2017. The LendingStar marketplace then expected to generate $5 million in purchased invoices during the year. That number was reportedly  expected to jump in a big way to $150 million in 2018.

Securities Commission Malaysia Invites Applications for Crowdfunding and Peer to Peer Lending Operators

The Securities Commission Malaysia (SC) is inviting interested parties to apply to operate investment crowdfunding platforms and peer to peer lending sites. SC states that applicants may submit their applications for registration now with a deadline of September 7th, 2018.

As at June 2018, the SC has registered thirteen online capital formation platforms with seven being equity crowdfunding operators and six being peer to peer financing sites. The SC reports that these platforms have benefited more than 300 micro, small, and medium enterprises (MSMEs) to raise a total of RM 118 million (approximately USD $29,207,950) via over 1,000 successful campaigns.

The SC has established “Guidelines on Recognised Markets” that outline the requirements for registered crowdfunding and P2P platforms, duties and responsibilities of an operator, and the type of issuers and investors who can participate in such activities.

As one would expect, it is an offence (under Section 7 of the Capital Markets and Services Act 2007) for any individual to operate a crowdfunding or a P2P platforms without prior authorisation from the SC.

The Southeast Asian country has been relatively supportive of Fintech innovation. The SC launched a Fintech Sandbox (SC’s FinTech Innovation Lab)in 2015 recognizing the importance of regulators working with innovators to improve services to both consumers and businesses. Bank Negara Malaysia set up a Fintech sandbox in 2016.

Several prominent investment platforms are already operating in Malaysia including FundedByMe, Crowdo and Fundnel.

Securities Commission Malaysia Shuts Down CopyCash Foundation Initial Coin Offering

Securities Commission Malaysia (SC) has issued a cease and desist (C&D) order to CopyCash Foundation. The C&D was in regards to a scheduled initial coin offering (ICO) launching on January 10, 2018.

SC issued a warning this week to investors regarding the CopyCashCoin ICO. Company executives have been in Malaysia scheduling events to promote the offer to investors. SC stated that given these solicitation activities may fall under existing securities laws, the SC would be calling in key officers of the Foundation to inquire into its activities.

The C&C covers all activities including in the CopyCash Foundation’s white paper and includes roadshows, seminars or any promotional events. CopyCash Foundation is registered in Singapore.

CopyCash Foundation claims that users of their platform enable participation in Foreign Exchange, Cryptocurrencies, Indices and Stocks markets “by simply copying the top traders in our community.”

The SC directive was issued following an inquiry that “found that there is a reasonable likelihood that “disclosures in CopyCash Foundation’s white paper and representations to potential investors will contravene relevant requirements under securities laws.”

The SC advises investors to be cautious of the risks of fraud and exercise due diligence before participating in ICO schemes. While the SC continues to facilitate use cases of digital assets in the capital market, it remains vigilant in monitoring ICO schemes given the heightened risks, and will not hesitate to take action where necessary.

Securities Commission Malaysia Warns Investors on ICOs, Calls in CopyCashCoin Executives Prior to Public Token Offering

The Securities Commission Malaysia (SC) says it has noticed an increase in initial coin offerings (ICOs) and the solicitation of the general public – including senior citizens. The cautionary statement by the SC was apparently cased by the forthcoming CopyCashCoin ICO that is scheduled to take place on January 10th with a kick off event in Kuala Lumpur. This crypto offering, from a Singapore-registered foundation, has  been organizing seminars and talks in Malaysian cities including Kuala Lumpur and Penang. These talks at hotels and cafes are designed to boost investor interest.

Given that these solicitation activities may fall under existing securities laws, the SC said it would be calling key officers of the Foundation to inquire into its activities including the purported launch of the CopyCashCoin ICO.

According to the CopyCash website, the Foundation is regulated by the law of Singapore and the ACRA. The Foundation’s mission is to “promote and support CopyCash and keep running this decentralized application to be a more globally accessible and trust worthier Platform.” CopyCash says it is “able to provide a transparent social trading and copy trading platform built on blockchain, where trading signals from top traders are made public.” A private sale of CCC Tokens has been completed. CopyCash held an “empowering session” in Kuala Lumpur on December 13th where it asked participants to;

“… be inspired as you embark on your social travesting journey with CopyCash and transform the trading and investing ecosystem! Leverage your investments by COPYING THE EXPERTS!”

The SC reminded the public to seek legal or professional advice if they are in doubt about the applicable legal and regulatory requirements and said investors should be mindful of the potential risks involved in ICOs and investment arrangements involving digital tokens.

The SC continues to work with Bank Negara Malaysia and other enforcement agencies, including foreign counterparts, to closely monitor ICOs and said it will take appropriate action where necessary.

Securities Commission Malaysia: Equity Crowdfunding, P2P Lending & DLT Gaining Traction as it Embraces Digital Innovation

Securities Commission Malaysia (SC) says it continues to lead digital innovation in finance with significant progress reported on major Fintech markets initiatives. At its flagship Fintech event, SCxSC Digital Finance Conference 2017, SC Chairman Tan Sri Ranjit Ajit Singh in his speech delivered to attendees outlined the progress made in digital markets since the commission revealed its Digital Markets Strategy. The regulatory agency’s strategy aims to enhance access to financing, increase investor participation, augment the institutional market, and develop synergistic ecosystems.

According to SC, the equity crowdfunding and peer to peer financing platforms have funded 450 campaigns, raising a total of RM 50 million  (USD $11.8 million) to meet the financing needs of the Micro, Small and Medium Enterprises (MSMEs).

For equity crowdfunding in particular, more than 70% of the issuers have women or youth as founders, with 40% of the investors under the age of 35.

During SCXSC, Second Minister of Finance Datuk Seri Johari Abdul Ghani announced that the government will establish a Co-Investment Fund (CIF) with RM 50 million from existing grants to be co-invested in SMEs with private investors through equity crowdfunding and P2P platforms.

SC will assist in setting up the fund, and define the co-investment criteria for both equity and debt-based financing. The SC has also launched its Digital Investment Management (DIM) framework this year, designed to promote automated discretionary portfolio management services to be offered in Malaysia.  SC expects the first digital investment manager to be licensed in the first half of 2018.

At today’s SCXSC event, SC has also announced measures to liberalize Malaysia’s RM 1.3 trillion (USD$ 307 billion) bond and Sukuk market for retail participation, and launched a centralized bond and sukuk information platform to provide easier access and comprehensive information on corporate bond and sukuk. The centralised platform, labeld BIX (bond and Sukuk information exchange), was launched by Datuk Seri Johari and Tan Sri Ranjit today.

Ranjit said that BIX will be an important component of the overall bond and Sukuk market infrastructure and the first of its kind to consolidate price and credit information combined with an advanced search function and other useful tools to help investors make more informed investment decisions and increase greater participation in the bond and sukuk market.

According to Ranjit, the SC is embarking on a pilot project to explore the usage of Digital Ledger Technology (Blockchain or DLT) in the unlisted and Over-The- Counter markets space. The findings from the pilot will form the basis of an industry blueprint. At the same time, SC is reviewing relevant regulations and guidelines to facilitate functional and effective use cases of digital assets in the capital market, including secondary market trading of established crypto currency and digital assets.

Securities Commission Malaysia Comments on Fintech Bridges

Securities Commission Malaysia (SC) has released a statement on the recently signed cooperation agreements with major financial centers. These “Fintech bridges” are described as a move to spur greater cooperation in facilitating and regulating innovations emerging within the digital finance industry.

Recently, SC has established Fintech bridges with the Hong Kong Securities and Futures Commission (SFC), the Dubai Financial Services Authority (DFSA) and the Monetary Authority of Singapore (MAS). This follows the first agreement signed between SC and the Australian Securities and Investments Commission (ASIC) in June 2017.

These Fintech bridges are designed to facilitate greater information sharing on emerging trends in finance and affiliated regulatory developments. It will also facilitate referrals of innovative businesses seeking to operate in each other’s jurisdictions and the exploration of potential joint innovation projects. These efforts will help shape the regulatory approach and encourage the growth and innovation of digital finance within the country.

“The fintech bridges with major markets in the Asia-Pacific and the Middle East form part of the SC’s digital strategy, and build on the already well-established relationships that the SC has with these regulators. Such efforts will promote innovation within capital markets, and enhance the cross-pollination of digital finance concepts which will benefit financial services institutions, startups and investors alike,” said SC Chairman Tan Sri Ranjit Ajit Singh.

The SC Chair said these cooperation agreements will shape facilitative and up-to-date regulations that would strengthen Malaysia’s market for Fintech and digital innovation in capital markets.

SC says the digital economy’s contribution to the gross domestic product (GDP) of Malaysia is expected to grow to 20% by 2020. As part of its digital agenda, the SC was the first jurisdiction in the Asia-Pacific to regulate equity crowdfunding (ECF) in 2015, followed closely by peer-to-peer (P2P) financing regulations in 2016.

To date, the registered market-based financing platforms have cumulatively raised a total of RM 28 million for 50 SMEs since coming into operations in the middle of 2016.

SC has also in recent years introduced regulations on digital investment management (DIM) services, and launched the alliance of FINtech community (aFINity) initiative to engage with the growing financial technology community in Malaysia.

SC will be holding its fourth SCxSC Digital Finance Conference on 6 & 7 November this year.

Here is the Warning from Securities Commission Malaysia on ICOs

Securities Commission Malaysia (SC), a regulatory body that has been quite forward thinking when it comes to Fintech innovation, has published a statement on Initial Coin Offerings or ICOs. SC cautions investors on participating in ICOs or token sales noting that some may be securities, some may not and some may donations. Of course some may of nefarious quality and thus should be avoided.

The SC statement is below.

ICO scheme operators typically raise funds through the issuance and sale of digital tokens, in exchange for investors paying for these tokens through virtual currencies, such as Bitcoin or Ethereum. We note that while all ICO scheme operators seek to raise funds from investors, these schemes can be structured in many forms, which may include:

  • Direct investments in projects with an aim to enable token holders to participate in a share of the returns from the projects
  • Seeking funding through Foundations where investors are not entitled to seek any returns on their investments
  • Issuance of tokens which entitle the investors to enjoy rights to a future product or service generated by the project managed by the operator

Investors should be mindful of the potential risks involved in ICOs schemes, and take note that:

  • Scheme operators may not have presence in Malaysia and it would be difficult to verify the authenticity of the scheme and the recovery of invested monies may be subject to foreign laws or regulations
  • Some ICO schemes and the parties involved operate online and may not be regulated, investors may be exposed to heightened risks of fraud, money laundering and terrorism financing
  • Digital tokens traded on a secondary market may give rise to risks of insufficient liquidity or volatile and opaque pricing
  • The structure of these ICO schemes might limit the legal protection and recourse for investors against scheme operators

As the terms and features of ICO schemes may differ in each case, investors who wish to engage or invest in ICO schemes are reminded to seek legal or other professional advice if there are doubts on the legitimacy of these schemes.

Investors should also fully understand the features of an ICO scheme, and carefully weigh the risks before parting with their monies. For example, investors should be aware that ICO scheme operators issues a whitepaper, which typically contains descriptions of the ICO scheme but may also carry disclaimers which absolve the operators from certain responsibilities and obligations.

A list of activities regulated by SC and license holders can be found below:

Securities Commission Malaysia Inks Innovation Cooperation Agreement With Austrian Securities and Investments Commission to Establish Fintech Bridge

Securities Commission Malaysia (SC) announced on Thursday it entered into an Innovation Cooperation Agreement with the Australian Securities and Investments Commission (ASIC) to further promote innovation in fintech services in their markets.  SC Chairman Tan Sri Ranjit Ajit Singh notably signed the agreement with the ASIC Chairman Greg Medcraft during the Salzburg Global Seminar on Finance.

According to the organization, it and ASIC will work closely to share information on emerging trends and regulatory issues in digital finance. Both regulators will also facilitate referrals of innovative businesses seeking to operate in each other’s jurisdictions, as well as explore potential joint innovation projects relating to the application of new technologies. Ranjit stated that the cooperation agreement is an important milestone for Malaysia’s digital finance sector and it was also a positive development for innovative fintech businesses seeking to expand and reach greater scale.

“Even as we continue to enable new forms of innovation in capital markets, we must not lose sight of the need to manage digital risks, by taking a strategic approach to risk management, recruiting digital talent and improving IT architectures. This collaboration between SC and ASIC in the realm of digital finance will further strengthen the cooperative arrangements between Malaysia and Australia in capital market development and regulation.”

Medcraft added:

“International cooperation on fintech is essential. This agreement will help local businesses grow beyond our borders, and improve our understanding of fintech in the region. We look forward to working more closely with our colleagues at the Malaysian Securities Commission.”

 

Malaysia: ASEAN’s First Country to Regulate P2P Financing

Malaysia’s Securities Commission (SC) announced last month that six P2P platforms were registered and would continue to be overseen by the Government of Malaysia, making Malaysia the first ASEAN country to regulate P2P financing.  The six platforms include B2B FinPAL, Ethis Kapital, FundedByMe Malaysia, ManagePay Services, Modalku Ventures, and Peoplender.

Some of the platforms are already live online, while others are not quite there yet.  All are expected to be fully operational sometime next year.  Of the ready platforms, lets explore how they distinguish themselves from one another.

Ethis Kapital

Advertised as the “World’s first and only licensed #IslamicCrowdfunding P2P platform”, Ethis Kapital is the result of a merger between Ethis Crowd and Kapital Boost, led by Umar Munshi and Erly Witowo respectively.  Ethis Kapital touts about 18,000 members by the time it launches, and it will operate in Malaysia, Singapore, and Indonesia.

FundedByMe Malaysia

FundedByMe claims that it has distributed nearly 30 million EUR to 460 companies that are operating in 178 countries to date.  FundedByMe Malaysia ran two campaigns that are now closed: “iTalent Management – Enterprise Digital HR Automation” and “Halal Speed Dating“.

ManagePay Services

ManagePay has three subsidiaries, including Managed Payment Services (MPSB), Sinatec, and Whatdevice.  MPSB currently invests in medium to large businesses’ R&D, claiming that it has invested in RM6,000,00 (approximately $136K) to date.  It appears that the P2P portion of ManagePay’s business has yet to be built as the other two subsidiaries focus on software and card payments.

modalku-indonesia

Modalku Ventures

Based in Indonesia but run by a team with ties to Malaysia and Singapore, Modalku says that it is “one of the pioneers of P2P lending in Indonesia”.  The company also says that it offers business loans and alternative investment products with competitive interest rates to SMEs, as well as a “safe investment alternative” for lenders.

johari-ghaniNew Straits Times reported that Deputy Minister of Finance Johari Abdul Ghani said that there is great potential in leveraging P2P platforms to fundraise for Malaysia in the same manner that such platforms reaped $25 billion for the U.S. in 2015.  Ghani reportedly told local reporters;

“It is estimated that this segment will grow to US$96 billion in 2025. Going with that, Malaysia is also set to get a slice of that pie since Prime Minister Datuk Seri Najib Razak has declared that 2017 to be the year of the Internet Economy for Malaysia.”

 

Crowdo Sets Regional Crowdfunding Record, Touts New MAS License

Singapore Marina ProminadeCrowdo, a South East Asian crowdfunding platform, announced today that it has received its provisional Capital Market Services (“CMS”) License from the Monetary Authority of Singapore (“MAS”). The CMS license will allow Crowdo to offer both equity crowdfunding and peer to business (P2B) lending solutions in Singapore, noted the platform, the latest milestone in Crowdo’s multi-market portfolio push in South East Asia. The announcement follows the public launches in Malaysia and Indonesia which aim to solidify Crowdo’s position as a crowdfunding leader in the region.

Leo Shimada“We are now gearing up for a full launch in our home market of Singapore and will offer both Equity Crowdfunding (ECF) and P2B Lending solutions,” commented Crowdo CEO and Co-Founder Leo Shimada. “The acquisition of the CMS license here should give confidence to our Investor members and Issuer clients that we are supervised by regulators and operate at the highest level of professional standards.”

Crowdo’s ECF platform in Malaysia is licensed and operational. In early March 2016, Crowdo launched its first fundraising offer in Malaysia. Its first issuer was for Malaysian-based The Parenthood, a retail concept which caters to the diverse needs of a family ranging from fun, retail to education co-founded by CEO Leroy Lee, an accomplished Malaysian entrepreneur. “Their expansion plans are regional aiming to be in Singapore and Hong Kong amongst other markets in the medium term,” noted Shimada via email. According to Shimada, The Parenthood achieved the largest equity crowdfunding offer to date in the region, having raised close to 0.9 million Singapore Dollars, surpassing its target by 250%. A second offer by wedding.com.my, is expected to launch soon. In early March 2016, Crowdo launched its P2B lending platform in Indonesia.

crowdo“We have successfully facilitated a record breaking ECF fundraise which has exceeded 0.9 million Singapore Dollars. This is a great testament to the massive potential of alternative financing and a strong sign of Crowdo’s credentials and capabilities as a leading operator in the space,”  Shimada added. “We believe that our track record speaks louder than words. The addition of the CMS license in Singapore so soon after we were approved as a Recognised Market Operator by the Securities Commission Malaysia (SC) last year would make Crowdo the only operator to achieve multi-jurisdiction licensing in SE. Asia. We are very proud of these achievements. No other operator has our track record and our multi-market presence.”

Shimada continued, looking toward the future P2B lending growth:

South East Asia at Night“We have been in business since 2013 and have grown from strength to strength. I see our multi-market licensing and operational presence as an invaluable competitive advantage in an increasingly crowded, yet nascent industry. Each of our markets is important and unique. Singapore is our home market, and passing the rigorous standards of the regulators here will give our investors additional assurance that we mean business. Malaysia is our showcase and I am immensely proud of my team there, having achieved a ground-breaking fundraising record with the first offer. As for our latest market – Indonesia – I see it as our growth engine and I am very optimistic about the growth prospects of P2B lending there.”

Positioned to offer a combination of market access, quality deal flow and financial expertise to both businesses and investors, Crowdo has a holistic view of both sides of the marketplace, led by a team of fintech experts with investment backgrounds who aim to guide businesses in their offer details and marketing plans. As for the future, Crowdo hopes to expand its portfolio in each of its current three markets and later launch into new countries within the region.

“We are currently fundraising for growth capital to extend our leadership position in the multiple markets we target. There is intense investor interest primarily due to the fact that that they recognize Crowdo as a distinctive and credible regional player which can operate professionally in a regulated environment,” concluded Shimada.

Crowdo Announces Official Launch of Equity Crowdfunding Platform in Malaysia

Crowdo Panel January 2016

Crowdo received one of the few licenses to operate last year granted by Securities Commission Malaysia. Now Crowdo has launched its equity crowdfunding platform claiming it is best positioned to provide accesss and deal flow to both investors and entrepreneurs. Crowdo states it has the fastest growing investment community in Southeast Asia currently pegged at 20,000 members and growing by “double digits” each quarter.

Leo Shimada, co-founder and CEO of Crowdo, called the official launch of Crowdo in Malaysia as “timely”. Shimada stated Malaysia is at the cusp of a dynamic and exciting growth phase regarding its startup scene.Leo Shimada

“Equity crowdfunding is widely seen as a powerful enabler that will help startups grow and further develop their innovation. At the same time, it is viewed as revolutionary, allowing businesses to leverage the full power of community-driven online platforms to efficiently raise capital, for the first time. Startups are more empowered to efficiently raise capital and investors can now transparently access new investment opportunities,” said Shimada.

Shimada said that Malaysia investors are very open to diversified investment offers.  With Securities Commission Malaysia at the forefront of fostering a modern funding ecosystem in Southeast Asia, investors are expected to have access to a transparent and efficient method to invest in early stage companies. This will, of  course, benefit the Malaysian economy as these startups will have better access to growth capital.  According to Crowdo, in Malaysia today approximately 650,000 SMEs operate comprising around 97% of the businesses in the country.

Crowdo Launch EventMalaysia may be the first country to craft a regulatory regime that facilitates equity crowdfunding in the region but many other countries are on the same path recognizing the profound need to encourage an innovation economy.  Crowdo expects to operate across the region at some point in the future.

Shimada stated, “[We have received] overwhelming interest from startups and investors in the past six months.”

“In Malaysai, entrepreneurs appreciate the benefits of equity crowdfunding, while investors find this platform a transparent and efficient way of diversifying their investment portfolios. Equity crowdfunding also offers cross border investment opportunities on a single platform.  International investors from all over the world ware welcome to invest on our platform”.

Startups on their platform will receive assistance in preparing offers. Crowdo’s team of consultants will be available to guide entrepreneurs to improve their chances of success. Investors who invest in these Malaysian startups will receive “comprehensive” information and will be guided to make informed investment decisions. Crowdo members are able to share regional market access and advice on a peer-to-peer basis.Malaysia Coin Ringit

“We aim to make Malaysia a flagship market for equity crowdfunding, and we are focused on building a sustainable and thriving equity crowdfunding platform and ecosystem in the country,” continued Shimada. “This launch is also excellent timing in light of Crowdo’s specialised expertise in Southeast Asia and our proven track record with several hundred projects funded in this region. The recent formation of the ASEAN Economic Community means we can anticipate a rise in regional investment flow with investment liberalisation3 leading to the free flow4 of investments and the freer movement of capital across the region. The ASEAN Comprehensive Investment Agreement further commits members to liberalise and protect cross-border investment, applying international best practices in the treatment of foreign investors and their investments. In the long term, it is anticipated that investment climates conducive to innovation will develop.”

Crowdo cites World Bank estimates that point to the potential for crowdfunding to grow – globally.  Management believes the potential value of the Asian market, including China, is up to $62.91 billion.