Recently, BNM had came out with a draft paper on FinTech, short for Financial Technology companies. This was in view that in near future, the financial sector will no longer be driven by traditional financial institutions.
Instead, the future of the industry will be coloured by technological firms that ply their trade within the financial sectors.
Already, this trend has begin to manifest itself in many US-based financial institutions. In fact, Citigroup NA chairman, Mike Corbat in a speech message was quoted to have redefined Citigroup as more of a technological firm instead of being a financial institutions. This was brought about by several high profile hirings Citigroup had made from the cream dela cream of the Silicon Valley.
Malaysia
In Malaysia, this trend has yet to fully manifest itself. However, Bank Negara Malaysia being the key regulator of the financial sector in Malaysia took it up to come out with a draft paper on the upcoming upheaval in the industry.
Unfortunately, the announcement had also been taken advantage by unscrupulous individuals who grabbed this opportunity to promote their illegal deposit-taking and foreign exchange companies.
I dare say these are illegal forex companies as Bank Negara Malaysia has yet to license any new locally incorporated financial institutions since the Asian financial crisis of '97 - '98 and no new licensed foreign international banks since India Commercial and Industrial Bank (ICIB) was formed in Kuala Lumpur.
These forex companies are largely frauds; illegally collecting money from unsuspecting greedy gullible public. Some claim their software can help to predict ups and downs of the market; prosecution are difficult as many of these gullible victims did not realise they had been duped to buy useless expensive softwares.
To make things worse, some of these fraudsters hide behind claims that their products are shariah-compliant, which would make it difficult for non-Muslims like me to help to advise.
Truth is, forex is non-shariah compliant and is haram due to 3 elements;
1. the money they bought is itself valueless on its own; money by itself is a fiat money. It has an intrinsic value assigned to it by the sovereign.
2. no actual exchange of goods; a key component in Islamic finance is the aqad. Each aqad must be executed before exchange of goods and goods exchanged must be real physical goods and has a definite value.
3. high element of gharar. Gharar or uncertainty should not be present. This covers uncertainty over ownership, cost, etc.
Well, that is as much as I could explain from my limited knowledge of Islamic banking and financing.
Truth is, forex is non-shariah compliant and is haram due to 3 elements;
1. the money they bought is itself valueless on its own; money by itself is a fiat money. It has an intrinsic value assigned to it by the sovereign.
2. no actual exchange of goods; a key component in Islamic finance is the aqad. Each aqad must be executed before exchange of goods and goods exchanged must be real physical goods and has a definite value.
3. high element of gharar. Gharar or uncertainty should not be present. This covers uncertainty over ownership, cost, etc.
Well, that is as much as I could explain from my limited knowledge of Islamic banking and financing.
Bitcoin
Now with Bitcoin it is even more interesting. Bitcoin is the result of some computer coding that a man with a Japanese-sounding name had created that needs to be mined to gain the value.
Over the years, Bitcoin has become a favourite for money-launderers to hide their finance. As there are no regulators regulating Bitcoin, it has become the perfect tool to conduct layering and integration.
The best thing about Bitcoin in Malaysian context is that Bank Negara Malaysia does not recognise the currency at all as it is not a back-sovereign.
A key argument that Bitcoin supporters would use to defend their decision is that Bitcoin increases in value and is safe. Partially true as currently people are assigning a value to Bitcoin; ie it has an intrinsic value. Similar to the siput kupang that once was used as currency in Southeast Asia, specifically in Malayan Peninsular. And Bitcoin is limited as there are only limited amount found in the market currently.
However, it is not safe. The most recent event was in Japan where virtual storage of Bitcoin was raided by unknown hacker(s), resulting in a loss of USE billion.
It is up to you to listen and understand
I understand some people may doubt what I have written here. Maybe the following screenshots of BNM reply to my email would help to clear doubts.
Well, if you're still unconvinced, maybe when BNM slap you with an RM50 million penalty or less will. For what is important for me is I have discharge my duty to the society.
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