Member Article

The Fintech Landscape

Developments in 2019 in terms of sectors were:

• Payments: Remittance was an area of significant growth in 2019, with a number of notable non-bank payments service providers receiving Remittance (Class B) Licences from Bank Negara Malaysia (BNM). MoneyMatch, the first graduate from BNM’s Regulatory Sandbox programme for incubating and ensuring the sustainability and regulatory compliance of fintech start-ups, was the first to receive a licence at the start of the year. UK-based firm TransferWise and AirAsia-backed firm BigPay also received licences. A Remittance (Class B) Licence issued under the Money Services Business Act 2011 allows for money to be sent internationally from Malaysia. DuitNow QR was introduced in 2019 as Malaysia’s National QR Code Standard under BNM’s Interoperable Credit Transfer Framework (ICTF). It is an extension of the DuitNow system managed by Payments Network Malaysia Sdn Bhd. (PayNet), a payments network and infrastructure provider in which BNM is the largest shareholder, with eleven Malaysian banks as joint shareholders. DuitNow was a service launched in late 2018 which allows users to transfer money between accounts using the recipient’s phone numbers or identity card numbers instead of account numbers. DuitNow QR allows users to make payments from participating banks or e-wallets using one QR code, the DuitNow QR, as opposed to using multiple unique codes for each merchant. Participants include banks, non-bank merchant acquirers, and e-wallets.
• Blockchain: Three digital asset exchanges were registered with the Securities Commission Malaysia (SC) in 2019: LUNO; Tokenize; and Sinegy Technologies. These three exchanges are currently the only legal platforms on which to buy, sell, and trade digital assets in Malaysia.

Except for those specifically approved by the SC, digital assetexchanges are prohibited from operating in Malaysia. The SC has made clear that operating an exchange without prior authorisation is an offence under the securities law of Malaysia, and offenders may be liable to a fine or imprisonment or both.

The SC introduced the Guidelines on Digital Assets in January 2020 which regulate fundraising via digital assets, such as initial coin offerings: see section 3.1 below.

Areas such as digital asset training, digital asset fundraising, equity crowdfunding, and peer-to-peer financing are highly regulated. Therefore, regardless of the technology which businesses adopt, they have to ensure that they are operating within the confines of Malaysian securities law and with the regulations and guidelines issued by BNM and the SC.