Digital assets like bitcoin and ethereum are not suitable to be used as a payment instrument, says Yamani Hafez Musa, Malaysia’s Deputy Finance Minister. He believes that cryptocurrencies are not a suitable method of payment for Malaysia.
Addressing the Parliament about the government’s role in monitoring and regulating the currency, the minister said the digital assets do not exhibit characteristics of money. Musa pointed out that due to speculative investments, digital assets are exposed to volatility.
He highlighted BTC peaking at $65,000 in April 2021 and losing nearly 50% of its value in the following week because of market forces. The minister pointed out crypto exchanges’ vulnerability to cyber attacks. Musa gave examples of the 2011 and 2021 incidents, wherein nearly $12 billion had been stolen. The deputy finance minister acknowledged cryptocurrencies’ impact on the environment. Musa noted that the electrical power used to process one bitcoin transaction can process 1.2 million via transactions.
Moreover, Malaysia’s central bank – Bank Negara till date hasn’t allowed the use of digital assets for payments. But it is keen to create its own digital currency and thus, is working on Project Dumbar. Bank Negara is testing the efficiency of the CBDC. It is looking into the usefulness of creating and employing a cryptocurrency.
A spokesperson for the central bank revealed that they are actively accessing the value proposition of CBDC to Malaysia. However, a decision has not been made on its issue. Bank Negara is looking into the Central Bank Digital Currency through the proof-of-concept. It is studying whether the currency can enhance the country’s technical and policy capabilities.