Crypto Unsuitable as Mode of Payment or Store of Value: Malaysia’s Deputy Finance Minister

March 4, 2022

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Nurul Anwar in Dewan Rakyat, a member of Parliament raised a question regarding the role of government in monitoring and regulating cryptocurrency in Malaysia. In response, Malaysian Deputy Finance Minister Yamani Hafez Musa said that virtual currencies like Bitcoin and Ethereum are unsuitable as a payment mechanism. Normally, digital assets are doesn’t hold a store of value and are not an appropriate medium of exchange. Further, he explained the reason saying a state of digital assets is vulnerable to volatility because of speculative investment. The deputy finance minister also noted that virtual currencies are unsuitable as a mode of payment as they do not display any aspects of money. He proceeded to discuss several issues he sees with cryptocurrency, including its volatility, risk of theft, cyberattacks, and its inability to process as many transactions as the current Visa payment system. Furthermore, he raised concerns regarding the environmental impact of cryptocurrency mining, stating:

He also pointed out the consumption of electrical power which affects the environment
Around 1.2 million Visa transactions can be processed with the electricity used to process only one Bitcoin. Galaxy Digital’s last year report showed that the banking system uses more energy than bitcoin. The finance ministry officials said that digital assets are not legal tenders but they have several uses like an asset class that can be invested in. He said that the nation’s Securities Commission has established crypto assets as securities under its law and the controller governing crypto trading actions in the nation.

Moreover, the deputy finance minister said that the monetary policy tools and prevailing finances remain helpful in conserving monetary stability and the nation’s finances. Now, Malaysia is cracking down on illicit virtual currency mining actions. Recently, the Malaysian authority closed a crypto mining undertaking and confiscated 1720 bitcoin mining devices. In 2021, they destroyed over 1000 bitcoin mining devices.

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