Malaysian minister says crypto isn’t good for payments

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The Malaysian minister says Bitcoin and Ethereum do not exhibit characteristics of money.

Malaysian Deputy Minister Yamani Hafez has among other several points, noted that digital assets such as Bitcoin (BTC) and Ethereum (ETH) are not suitable when looked at from the perspective of being used for payment purposes.

In a wide-ranging response to a question on the topic of cryptocurrencies and their growing use as money, the minister said:

“Digital assets such as Bitcoin and Ethereum are not suitable to be used as a payment instrument as these assets do not exhibit characteristics of money.”

Volatility in cryptocurrencies

While people are free to hold and trade digital assets in the largely crypto-friendly country, the authorities have not allowed it for use as legal tender. And the minister appeared to reiterate this stance by referring to why Bitcoin and other cryptocurrencies are lumped into this digital asset basket but cannot be used as digital currencies.

“In general, digital assets are not a store of value and a good medium of exchange. This is due to the state of digital assets which is exposed to volatility as a result of speculative investments,” Hafez explained.

The minister’s response followed a question in parliament regarding the government’s outlook on crypto regulation and plans for a central bank digital currency (CBDC)

Bank Negara yet to make clear CBDC move

He added that Bitcoin’s approximately 10 transactions per second pales in comparison to say, the 65,000+ capable on the Visa network. This according to the official’s suggested perspective, makes the legacy payment remain king in the payments space.

The minister then explained that Malaysia’s central bank, Bank Negara, has so far not allowed the use of digital assets for payments. Neither has it made any concrete plans for the issuance of a CBDC.

“The monetary policy tools and existing finances [also] remain effective in maintaining monetary stability and the country’s finances,” he noted.

But not to dismiss cryptocurrencies altogether, Hafez said they are now an investment class that people can explore. To this, he said, Malaysia’s Securities Commission (SC) views crypto as a security.

This week saw Bitcoin and other cryptos get into the global spotlight following the Russian invasion of Ukraine. Just hours after the war started, crypto holders donated hundreds of thousands of dollars worth of crypto to a nongovernmental organisation (NGO).

The donations spiked past the $4 million mark on the second day, crossing $10 million in three days. And apart from BTC and ETH, Polkadot (DOT) was also accepted by the Ukrainian government.

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