Regulation and bitcoin surge raise crypto adoption in Malaysia

By AFIQ AZIZ

GLOBAL cryptocurrency prices appreciated in 2020 driven by an influx of growing interest from large-scale institutional investors and Malaysia is fortunate to ride on the trend as local participation in digital currencies also grew, said digital asset exchange (DAX) Luno Malaysia Sdn Bhd.

Luno Malaysia country manager Aaron Tang said regulators participation in the industry has also allowed the asset to thrive.

Bitcoin, which dominates 62% of the total market, hit its new all-time high of US$41,711 (RM166,359) — a 264% surge within a 12-month period.

The leading cryptocurrency, previously, almost rocketed to US$20,000 in December 2017 compared to only about US$900 in January same year.

Following this, the Securities Commission Malaysia (SC) then regulated the market through the enforcement of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 on Jan 15, 2019.

The three registered DAX opera- tors are Luno Malaysia, SINEGY Technologies (M) Sdn Bhd, Tokenize Technology (M) Sdn Bhd, which had complied with the regulatory requirements within the nine months period given by SC.

Tang said Luno Malaysia, which said to control 90% of the regulated cryptocurrency market, had signed up more than 80,000 new customers in 2020.

“In just the first month of 2021, we are seeing thousands of new customers signing up on a daily basis due to their interest in investing in Bitcoin,” Tang said in a statement recently.

Among the attributions to the surge of Bitcoin price in 2020 are major institutional investors in the digital currency and the participation of sovereign wealth funds — such as the Norwegian Government Pension Fund and the move by financial services like PayPal, enabling their customers to transact cryptocurrency on the platform. As a result, Tang said it will drive the cryptocurrency market from big institutions to the small retailers market.

However, Tang explained that the trust towards cryptocurrency, especially Bitcoin, is driven by its unique value instilled in the asset — in particular with the case of “bitcoin halving” which latest took place in May 2020.

“The 2016 bitcoin halving is widely credited with sparking the bull run that culminated in December 2017’s previous all-time high.

“Many stakeholders anticipate a similar trajectory when the bitcoin halving in May 2020 saw block rewards fall from 12.5 to 6.25 bitcoin.

“As a result, the price of Bitcoin has increased steadily ever since,” Tang said, adding that there is a huge possibility the same trajectory will be the same in future.

Tang also said the cryptocur- rency space has changed since 2017, where a range of other macroeconomic considerations will have to be considered, particularly with the Covid-19 pandemic.

“Broadly speaking, the global pandemic has nudged large numbers of people into using technology, and by extension to cryptocurrency, more than ever.

“This is clear in the explosive growth of digital services such as e-commerce, streaming and video conferencing.

“We believe it has accelerated adoption of online financial services as well, which include cryptocurrencies and digital assets,” he added.

Nevertheless, Tang hoped the regulatory body would maintain progressive regulations, as it is deemed crucial for the healthy growth of the cryptocurrency industry.

“We hope regulators will continue to balance the need for rules with space for innovation to happen.

“We are looking to aggressively expand our education and awareness programmes in Malaysia.

“Despite all the hype, less than an estimated 2% of the world’s population owns cryptocurrencies.

“We will continue working with multiple partners to help bring cryptocurrencies to the mainstream,” Tang said.