by AFIQ AZIZ & SHAZNI ONG
SINEGY Technologies (M) Sdn Bhd aims to attract more than 30,000 new investors to its platform by June next year after it become one of three digital asset exchanges (DAXs) to receive the Securities Commission Malaysia’s (SC) conditional approval last month.
“We would like to get up to 10,000 users very quickly — upon the full approval — and gradually increase to 30,000 accounts by the first half of 2020. That is where we would like to be,” Sinegy’s head of institutional sales John Sidoli told The Malaysian Reserve at the 1st Malaysia Blockchain Week in Kuala Lumpur recently.
Based on their historical record, Sidoli said the company would be able to achieve the target.
“We are being realistic; I believe there are smaller exchanges that did not get a licence that already have about 30,000 Malaysian users in their accounts. Thus, ours is not a low target,” he said.
London-based Luno and Singapore-based Tokenize Technology (M) Sdn Bhd were two other exchanges granted conditional approval by the SC to continue their operations in Malaysia for the next nine months.
Within the period, all exchanges are required to comply with all regulatory requirements from market surveillance to trading rules elements.
Sidoli added that Sinegy has opened around 1,000 user accounts since starting operation in August 2018.
The government decided to publish guidelines to regulate offering and trading of digital assets in January, placing dealings of such assets under anti-money laundering and counterterrorism financing rules, cyber security and business continuity measures.
As a result, the exchanges had to notify their investors to withdraw their money and subsequently close their accounts.
Simultaneously, Sidoli said Sinegy established a trust account — a segregated bank account for its clients to transfer the funds from their old account.
“Basically, we cleared the amount out (to the new trust account). So, when we receive a go from the SC to go live, we can start fresh with our new bank accounts,” he said adding that the firm preferred to work with local financial institutions rather than foreign.
“We hope with the current conditional approval by the SC, we are able to establish a long-term banking partnership,” he added.
In terms of policy and procedures compliance, Sidoli said the Penang-based company may find major challenges in drafting its trading rulebook to submit to the SC.
“To design a legal framework for the exchanges would be challenging. The rulebook for Bursa Malaysia is about 200 pages long. We have to basically design a similar rulebook, but one that is relevant for us and the cryptocurrency market in Malaysia,” he said.
Tokenize Technology and Luno would also have to submit their rulebooks within the nine months period.
“The SC would get a variety of opinions and then cherry pick the best practices and release that as a framework down the line, which is an efficient way of setting a regulatory framework in Malaysia,” he said.
“It makes it difficult for us, but if we want the licence, we would have to work for it and show that we understand what we are dealing with,” he added.
For Luno Malaysia Sdn Bhd, the conditional approval would pave the way for more regulated cryptocurrency exchanges in the country.
“We have always maintained that regulation brings clarity and protection to the consumer, hence it will allow many more Malaysians to safely get their first experience with bitcoin and other cryptocurrencies,” marketing and community manager Aaron Tang said.
He expects the market to continue growing steadily as seen not just in South-East Asia, but also in Luno offices in other parts of the world.
Tang commended the SC for being progressive by balancing investors’ protection with promoting innovation in the financial market.
“Despite being unable to provide full services to Malaysian investors, we have continued to receive much interest from existing and potential customers through a variety of channels. This is a reflection of continued awareness and demand for cryptocurrency from Malaysians,” he added.
As one of the country’s largest cryptocurrency exchanges, Luno is expected to obtain full approval from the SC by September this year.
“We have a few more processes to complete for the SC’s review, and are confident of receiving full approval soon,” Tang said.
He noted that the biggest challenge for the DAXs would be to create a strong marketplace as most people still lack understanding of cryptocurrencies, or how to safely buy, sell, store this asset class.
“Our current priority is to complete the approval process with the SC as soon as possible, following which we will continue rolling out our education and awareness plans for the Malaysian market.
“Apart from building world-class products and services, we will invest in education because it’s the key to helping people upgrade themselves and their communities,” he said.
Luno, which also has offices in Singapore and South Africa, facilitates the trading of bitcoin and ethereum — the two most influential digital coins since the cryptocurrency inception in 2009.