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Malaysia has joined a growing list of nations imposing capital controls on their people. Economic and geopolitical tensions are forcing governments to restrict the flow of money across their borders. As this is practically a form of financial subjugation, will more turn to crypto?
Crypto Over Cash Controls?
It was reported by local media this week that Malaysia’s central bank is planning to impose a cash transaction limit of RM25,000 (approx. $US6,000). Bank Negara (BNM) deputy governor and chairman of the National Coordination Committee to Counter Money Laundering (NCC), Datuk Abdul Rasheed Ghaffour, said that the measure was to address the abuse of physical cash used for illicit activities.
The restrictions will apply to all cash transactions including payments of goods and services and donations and transfers between parties and businesses. There are a couple of exemptions however including transactions to and from regulated financial institutions and humanitarian aid donations.
The banker asserted that it would not affect households since, according to their very small survey, 80 percent of them are of low and middle income with average cash transactions well below the limit.
“Our engagements with individuals suggested that a single transaction over RM25,000 by cash is really (unprecedented). This can also be seen with the average total expenditure of households across various income brackets.”
He added that the two-fold objectives of the cash embargo were to complement the Anti-Money Laundering and Counter Financing of Terrorism framework in Malaysia and send a message that anonymous transactions will not be tolerated.
As another nation stomps on the rights of its people, the use of crypto currency may get a boost as a result. It has already been suggested that Bitcoin and crypto usage could spike as it has done in other countries that have imposed capital controls.
No Bitcoin Rush Just Yet
According to Coin.dance which has measured localbitcoins volume in MYR, there has been no increased activity yet which doesn’t mirror the yo-yoing of BTC price over the past couple of years.
A Reddit on the topic generated a response from a Malaysian in the crypto industry who suggested it may not cause a big Bitcoin rush. Reasoning would be that individuals can still use large amounts of cash providing they inform the bank the purpose of the transfer. This system is in place in many other countries already.
He added that there were many migrant workers in Malaysia that exclusively use cash and it has yet to develop the digital payments systems that are abundant in China. Additionally, crypto usage for payments is also very low there;
“I have yet to stumble on a place that accepts cryptos. And I’m living in the city. Most crypto fans here are probably like me too – more interested in the speculation and trading part although we know quite a bit about the technology too.”
So initially it does not look to be happening though the pattern of regime enforced capital controls is increasing across the world.
Image from Shutterstock
