According to Malaysia’s deputy finance minister, cryptocurrencies such as bitcoin and ethereum are not fit as a medium of exchange or a store of wealth. While digital assets are not legal cash in Malaysia, a finance ministry official stated that they are an investable asset class.
Malaysia’s Deputy Finance Minister on Cryptocurrency
Malaysian Deputy Finance Minister Yamani Hafez Musa discussed cryptocurrencies Thursday in response to a question in Dewan Rakyat from parliament member Nurul Izzah Anwar, according to The Star. The parliamentarian enquired as to the function of the government in monitoring and regulating cryptocurrency.
Noting that cryptocurrencies are not controlled by the central bank in Malaysia, Bank Negara Malaysia, the deputy finance minister stated:
Bitcoin and ethereum are not appropriate as payment instruments… By and large, digital assets are not a reliable store of value or a convenient medium of trade.
“This is related to the volatility of digital assets as a result of speculative investments,” he continued. Additionally, the deputy finance minister stated that cryptocurrencies are incompatible with payment systems since they “do not display the properties of money.”
He then discussed many concerns he has with cryptocurrencies, including its volatility, theft risk, cyberattack vulnerability, and inability to process as many transactions as the present Visa payment system. Additionally, he expressed concern about cryptocurrency mining’s environmental impact, stating:
Additionally, what is significant is the enormous influence on the environment, as the electrical power required to complete a single bitcoin transaction is equivalent to 1.2 million Visa transactions.
The energy consumption of bitcoin has been a source of contention, with some claiming that bitcoin transactions consume far more energy than Visa transactions.
Nic Carter of Castle Island Ventures noted that comparing the energy consumption of bitcoin transactions to Visa transactions “relies on so many misunderstandings of Bitcoin.” “In summary, the comparison between Visa and Bitcoin is ludicrous,” he explained. The parallel is apples to koalas. Visa is a payments network that, in the end, is dependent on the underlying financial infrastructure. Bitcoin is the underlying architecture of the financial system. It is a full-featured financial network.”
Additionally, in May of last year, Galaxy Digital produced a paper demonstrating that the banking system consumes substantially more energy than bitcoin.
While digital assets are not legal cash in Malaysia, the finance ministry official stated that they have a variety of applications, including as an investment asset class. He said that the country’s Securities Commission has classified crypto assets as securities under its law and is now supervising cryptocurrency trading activity in the country.
Additionally, the deputy finance minister stated that:
“monetary policy tools and existing finances continue to be successful in ensuring monetary stability and the country’s financial stability.”
Meanwhile, Malaysia has stepped up its crackdown on illegal bitcoin mining. Malaysian authorities shut down a crypto mining company and seized 1,720 bitcoin mining machines in December as part of a crackdown on electricity theft. In July of last year, the authority used a steamroller to destroy nearly 1,000 bitcoin mining devices.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.