Industry leaders: Necessary to regulate cryptocurrencies
KUCHING: Regulators need to monitor the use of cryptocurrencies, and banning the trading of these currencies would be a good start.
According to AmInvestment Bank Malaysia chief executive officer (CEO) Raja Teh Maimunah Raja Abdul Aziz, the problem with cryptocurrency is that it has attracted some negativity because people have lost money, thus leading many to assume it was a scam and the reason for that is because people traded in these currencies.
“When you start trading anything, it becomes speculative because the currency in itself does not have any intrinsic value, it is not asset-backed. So, of course it becomes speculative.
“Remember our financial crisis back in 1997? That was a result of excessive speculation on the Asian currencies. So, I hope they will regulate the use of cryptocurrency rather than ban it.
“As a start, I hope regulators will consider banning the trading of these currencies so that they will not be used as a speculative tool, instead to truly use it as a means of exchange,” Raja Teh said.
“In the context of Islamic finance, speculation is ‘haram’. You have to remove the element of speculation and use it purely as a means of exchange,” Raja Teh said.
She emphasised that under syariah law, you can only trade commodity and thus cryptocurrency, in her view, is not a commodity for you to trade in.
Meanwhile, when queried on his view on cryptocurrency, INCEIF Malaysia president and chief executive officer Dato’ Dr Mohd Azmi Omar said that there are many viewpoints, including those from syariah scholars, who are trying to pinpoint whether crypotcurrency is money, a commodity or financial asset.
“Because we know money by itself has no value, but we use it as a medium of exchange. At the end of the day, it is still quite difficult to say that this is a commodity, money or financial asset.
“However, there are views among syariah scholars who say that it is a medium of exchange because cryptocurrencies can be used as a medium of exchange -- which In fact, is happening now.
“Some view that because it’s not backed by the government, therefore it’s not money,” Mohd Azmi said.
“Looking further again (at criticisms towards cryptocurrency) especially from the public and syariah scholars, they tend not to look at cryptocurrency, but they look at the trading of cryptocurrency. Obviously, people are using cryptocurrency for speculating purposes.
He emphasised that it is all about controlling speculation.
Raja Teh and Mohd Azmi were present at the 13th World Islamic Economic Forum to discuss the prospect of fintech in Islamic finance.