Central Banks Urged to Regulate Use of Crypto Currencies

By Harizah Hanim Mohamed KUCHING (Sarawak), Nov 23 (Bernama) — Central banks should regulate the use of crypto currencies, said Rand Merchant Bank (RMB) Blockchain Lead, Farzam Ehsani. RMB is a division of FirstRand Bank Ltd, a leading South African corporate and investment bank and a part of the largest financial services groups in that continent. “It is understandable that central banks would like to know who is transacting in their own economies. The buying of crypto currencies using fiat money should be regulated by central banks as the current financial system required rules to avoid money-laundering and other illicit activities,” he told Bernama on the sidelines of the 13th World Islamic Economic Forum (WIEF) here Thursday. Farzam was one of the panellists at the forum’s discussion on blockchain technology and its impact on international trade. He said if the crypto currencies were used for illicit activities and proven, then the action should be taken. “It is important to know that crypto currencies are similar to other technology, which can be use for good or bad. At the same time, they allow transfer of value across border cheaper than any mechanism humanity has. “They play the same role as cash but in a much more effective way and across longer distance,” he said. On the acceptance of the crypto currencies in the South African region, Farzam said, similarly to other parts of the world, South Africa was adapting to the trend quickly. “Bitcoin, which is the first manifestation of crypto currencies has been introduced about nine years ago,” he said. Farzam said looking from the perspective of Islamic finance, there should not be any contradictions as other asset classes, namely, gold and US dollar,which were also standalone and not backed by anything. “As an example, in Islamic finance, gold is seen as an asset but nothing back gold, but humans decided that gold is valuable because it is a scarce thing and does not rust. “Similarly to US dollar, it is a fact that 95 per cent of dollar is in digital form and are circulated in banks around the world,” he said. Bank Negara Malaysia (Central Bank of Malaysia) Governor, Muhammad Ibrahim, said work on a regulatory structure for cryptocurrency has begun and starting next year the bank would designate persons converting crypto currencies into fiat money as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. Muhammad said this in his welcoming remarks at the Third Counter-Terrorism Financing Summit 2017 in Kuala Lumpur Wednesday. He said the move was aimed at preventing the abuse of the system for criminal and unlawful activities, and ensuring the stability and integrity of the financial system. -- BERNAMA