Industry Insiders Say Crypto Regulation Is Necessary, But Only If It Is Effectively Designed And Implemented
by S BIRRUNTHA / Graphic TMR
The The debate over the introduction of tighter regulatory oversight for cryptocurrencies has been going on for years.
Despite increased scrutiny, digital assets continue to operate outside centralized rules, at least for the most part.
Luno Malaysia country manager Aaron Tang said cryptocurrency regulation is necessary but will only be effective if it is effectively designed and implemented.
He added that globally and across the Asia Pacific (Apac) region, local governments and authorities are focusing on regulated cryptocurrency platforms.
“There are several factors that have to be addressed.
“Firstly, regulators have the difficult task of having to become familiar with new technologies that very few fully understand. At the same time, the cryptocurrency landscape is still in its early stages of development.
“Second, we need to formulate regulations without stifling innovation, weighing the need to protect consumers against the benefits of new technologies with great long-term potential.” he said. Malaysia Reserve (TMR).
Mr Tang said an open dialogue with regulators is essential to ensure an ongoing bridging process. This includes asking for clarification, setting expectations, or addressing potential challenges. Also, continued collaboration between regulators and industry players like his Luno is essential to the growth of the digital asset landscape.
As for Luno, the digital asset exchange operator has actively cooperated with financial regulators such as the Securities Commission of Malaysia (SC) in the area of compliance and consumer protection.
“We believe this will lead to increased investor trust and transparency,” Tan said.
To elaborate further, Tang believes regulation is an important part of the cryptocurrency ecosystem. This is to raise global and local standards, set barriers to entry for operators and protect consumers.
Above all, he stressed that regulation brings accountability to areas many are still unfamiliar with.
Tang said the existence of business licenses and other regulatory standards in a country is very important as it is a good indicator that consumers can trust the company to fund it. .
“This demonstrates that we have a robust risk management framework and standards in place regarding management measures to mitigate risk and protect the landscape.
“Furthermore, it also lays the groundwork for cryptocurrency companies to develop cooperative and collaborative relationships with key partners.”
Tan also stressed that stronger regulatory provisions and higher standards could lead to tougher actions against unregulated platforms and service providers with less ability to protect customer information and funds. .
He argued that if the public were aware that they were dealing with a regulated organization, they would know that the organization met standards set for protection, thereby allowing investors to said it would increase the trust and confidence of
“This will get the ball rolling for mass adoption and allow cryptocurrencies to be introduced in a safe and secure manner.
“Ultimately, industry growth is a joint effort between customers and regulators, not just industry players,” he said.
In that regard, Tang said Luno is committed to safely exposing cryptocurrencies to customers, including working with local regulators to obtain regulated and licensed status in the markets in which it operates. I pointed out that
Luno currently has offices in Malaysia, Singapore, Indonesia, USA, UK, Australia, South Africa and Nigeria. He has over 10 million customers worldwide on this platform, which strongly proves that Luno is a trustworthy cryptocurrency investment platform.
Strengths and weaknesses of regulations
Meanwhile, CoinGecko co-founder and COO Bobby Ong said Malaysia’s cryptocurrency regulatory environment has evolved since it was first established in 2019.
He said its early implementation allowed it to be operated by regulated players, and that overall it helped spread cryptocurrency awareness among the general public.
“That said, it will be important for regulators to remain agile and adapt to evolving industries,” he said. TMR.
Ong said that for the cryptocurrency industry to become mainstream, it needs to comply with regulations and work together.
He added that clearer regulation, along with a proper regulatory regime, could give greater confidence to users new to cryptocurrencies and ultimately improve crypto adoption rates.
Still, there are pros and cons to having rules in place, Ong said.
He pointed out that tighter regulation means projects, exchanges and cryptocurrency-related businesses are held to higher standards, which is beneficial to investors overall.
“Investor interests will be protected and legal recourse will be possible against fraud and projects that violate these regulations.
“On the other hand, some investors may be fed up with police and be denied access to certain investments deemed too risky by regulators.
“Over-regulation of the industry can also stifle innovation.”
Hong Qi Yu, founder and CEO of cryptocurrency exchange Tokenize Technology (M) Sdn Bhd, agreed that Malaysia’s regulatory situation is currently very positive.
He said regulations are more open to listing coins, and industry players are pushing for more coins and other cryptocurrency services to be listed soon.
Hong also stressed that regulation is indeed a good thing for the crypto industry and a necessary step for cryptocurrencies to be widely adopted.
“This is especially after the story of Luna and the downfall of giant corporations like Celsius.
“Therefore, regulation is necessary for the industry to attract serious and smart money.” TMR They said.
Luna is an inflation-free stablecoin created by Terraform Labs and used as a native asset on the Terra blockchain. In May 2022, the Luna cryptocurrency network rocked the global digital currency market, deemed the biggest cryptocurrency crash in history with an estimated US$60 billion (RM267.39 billion) wipeout.
The crash was reportedly caused by the de-pegging and loss of value of the UST stablecoin (also developed by Terra and closely related to Luna) in May of this year. In a panic, more people sold his UST, so more Luna was minted, increasing Luna’s circulation.
After the crash, cryptocurrency exchanges began dropping the Luna and UST pairing. In short, Luna was abandoned because it no longer had value.
Cryptocurrency exchanges, also known as Digital Asset Exchanges (DAX), are platforms that allow you to exchange Ringgit for cryptocurrencies. The Malaysian cryptocurrency exchange is licensed and regulated by SC when the country started regulating his DAX in 2019.
By June 2019, the SC had approved three cryptocurrency exchanges to operate in Malaysia: Luno, Sinegy and Tokenize. Prior to the issuance of licenses by the SC, 56 cryptocurrency exchanges were registered with the Bank of Malaysia (BNM) as establishments.
IMF calls for global regulatory framework
In September of this year, the International Monetary Fund (IMF) announced a global regulation of cryptocurrencies to bring order to markets, increase consumer confidence, set limits on what is acceptable, and provide a useful and safe space. I asked for a framework for keep innovating.
A recent report by Aditya Narain, Deputy Director of the IMF Monetary and Capital Markets Department and Marina Moretti, Deputy Director of the Monetary and Capital Markets Department of the IMF, said the regulatory structure is woven and patterns are expected to emerge. is emphasized.
However, the IMF said the longer this takes, the more concerned national authorities will be bound by different regulatory frameworks.
“This is why the IMF is calling for a coordinated global response, one that will inherently close regulatory gaps arising from cross-sectoral and cross-border issuance and ensure a level playing field. Yes, because it is consistent, it aligns with mainstream regulatory approaches across a range of activities and risks, and because it is comprehensive, it covers all parties and all aspects of the crypto ecosystem.” they said.
According to Aditya and Moretti, cryptocurrency assets have been around for more than a decade, but it is only recently that efforts to regulate them have shifted to the top of the policy agenda.
They say it’s only in the past few years that crypto assets have moved from a purpose-seeking niche product to a more mainstream presence as a speculative investment, a hedge against weaker currencies, and a potential means of payment. I pointed out that it was because
“The volatile but impressive growth in the market capitalization of cryptocurrency assets and their creeping into the regulated financial system has led to increased efforts to regulate them.
“Similarly, the expansion of cryptocurrency’s various products and offerings, and the evolution of innovations that facilitate issuance and trading.
“The failures of cryptocurrency issuers, exchanges, hedge funds, and the recent decline in cryptocurrency valuations have added impetus to regulatory pressure,” they added.
Nevertheless, Aditya and Moretti noted that applying existing regulatory frameworks to crypto assets or developing new ones is difficult for several reasons.
First of all, the cryptocurrency world is evolving rapidly, and regulators have struggled to acquire the talent and the skills to match it, given the lack of resources and many other priorities. said it does.
They also noted that monitoring the cryptocurrency market is difficult. This is because the data is volatile and regulators find it difficult to monitor the thousands of parties that may not be subject to typical disclosure or reporting requirements.
- This article was first published in The Malaysian Reserve Weekly Print Edition