This shows digital payment system can exist in a fair and progressive regulatory environment
By LYDIA NATHAN
LUNO Malaysia has become the first registered cryptocurrency exchange in the country, showcasing that the digital payment system can exist in a fair and progressive regulatory environment.
Its country manager Aaron Tang said having a regulatory framework for cryptocurrency is crucial as it lays the groundwork to develop relationships with other industry players such as banking institutions.
“We have worked closely with the Securities Commission Malaysia (SSM) in helping it to understand the cryptocurrency industry better as it goes through the regulatory process. As a result, the SSM was efficient in introducing cryptocurrency-specific regulation, and we are proud to become the first registered cryptocurrency exchange in Malaysia. This has shown that it can exist in a fair and progressive regulatory environment,” he said in a statement.
According to Tang, the nation is now storing more than RM1 billion of digital assets on behalf of more than 300,000 customers and processing more than RM4.2 billion in 2021, indicating a positive trend of cryptocurrency demand in Malaysia.
“Regulators like SSM and Bank Negara Malaysia are opening up the way for investors, traders and individuals to maximise the benefits of a new financial system such as cryptocurrency.
“Today, there are three approved digital asset exchanges in Malaysia, further showcasing the Malaysian regulator’s readiness to uphold the regulatory framework of the cryptocurrency industry in Malaysia,” he added.
He said some of the benefits of a framework include raising the bar for the industry, as well as strengthening cryptocurrencies and encouraging mass public adoption.
“Cryptocurrencies are maturing from a self-regulated domain to a regulated one, where individuals and businesses can introduce aspects of cryptocurrency assets into their daily lives, with investments and payments.
“However, for this to happen, a relationship with local regulators needs to be built upon trust and a common goal to ensure a financial system that is beneficial to every- one regardless of their background,” he noted.
Meanwhile, Tang said as a new technology bitcoin has prompted many questions from everyone looking to understand it.
He said its volatility, environmental impact, the crackdown in China and regulatory issues faced by a certain cryptocurrency exchange have become a recent topic of debate.
“The latest cryptocurrency mining and trading regulations in China have caused a stir in the market. It is estimated that 90% of the country’s mining capacity will shut down as a result. This new regulation is significant news as 65% of bitcoin mining occurs in China due to the wide availability of cheap electricity sources in several regions.”
“Nevertheless, we believe that these regulations will strengthen bitcoin’s long-term growth. Increased mining decentralisation ensures that the bitcoin network is less vulnerable to the regulation of one country in the long term.
“The mining regulation in China presents an opportunity for miners to move to locations with abundant renewable energy sources such as El Salvador for its geothermal energy and Texas, the US for its solar and wind power,” Tang added.
He also said there have been some recent issues in Europe and as a result, the cryptocurrency exchange was prohibited from operating in one country and received warnings from regulators in several others.
“This situation highlights why cryptocurrency exchanges need to work closely with local regulators to establish appropriate regulatory frameworks that benefit both industry players and customers,” Tang concluded.