Luno expects full SC approval before September, sees better growth in 4Q19

The DAX has 9 months to fully comply with all regulatory requirements after obtaining ‘conditional approval’

by AFIQ AZIZ & SHAZNI ONG / pic by LUNO

One of the country’s largest cryptocurrency exchanges, Luno Malaysia Sdn Bhd, is expected to obtain full approval from the Security Commission Malaysia (SC) by September this year.

The London-based corporation and two digital asset exchanges (DAXs) have already obtained a “conditional approval” by the regulator last week, giving them nine months to fully comply with all regulatory requirements. If realised, it would allow these licensed corporations to accept new investments into their accounts.

Luno South-East Asia GM David Low told The Malaysian Reserve that the company’s establishment in the market since 2015 has made some significant progress. It includes its physical office set-up in the first quarter of 2018 (1Q18).

Low is optimistic that the conditional approval will draw more interest from local investors.

“The SC approval is only a conditional approval. There’s still one last step which is to finalise all details with the SC and get their full approval before being allowed to relaunch.

“We are quite confident internally that we can meet the SC’s requirements. We are almost there except for one last step,” Low said.

Luno, which also has an office in Singapore and South Africa, facilitates the trading of bitcoin and ethereum — the two most influential digital coins since the cryptocurrency inception in 2009.

Bitcoin is currently valued at US$142 billion (RM591 billion), while ethereum’s market capitalisation stood at US$26.6 billion, according to CoinMarketCap.com.

“Luno is aiming to launch within the next few months upon full approval by the SC, and expects to grow the business further by 4Q19. We believe it is manageable,” Low added.

The two DAXs are Sinegy Technologies (M) Sdn Bhd and Singapore-based Tokenize Technology (M) Sdn Bhd, which are regarded as the first-ever registered digital exchanges in the country.

The SC announcement is a follow- up to the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 which came into force on Jan 15, as well as the subsequent issuance of the revised Guidelines on Recognised Markets on Jan 31, 2019, which introduces new requirements for DAX operators.

In January, Luno’s trading platform had its bank account frozen by the Inland Revenue Board, resulting in the crypto provider not being able to process deposits or withdrawals in the country for a few weeks.

Bank Negara Malaysia has announced that digital currency is not a legal tender in this country, while the SC, despite having conditionally approved the three DAXs, reiterated that the public needs to be mindful of the risks related to trading in digital assets.

It includes the risks of trading on exchanges that are not registered with the SC.

Since March, only 22 DAX companies have been allowed to operate in the country.

In a statement last week, the SC also instructed other 19 exchanges to cease their activity immediately and return all monies and assets collected from investors.

The latest development by the Malaysian authority will set a benchmark on the country’s approaches on digital exchanges.

Besides Malaysia, advanced countries such as South Korea, Japan and Singapore have already drawn their own cryptocurrency regulations.

Japan, which is the largest market for bitcoin, regulated the industry in March 2016. It announced the cryptocurrency as a legal form of payment — becoming one of the leaders in digital coin innovation and adoption.