- 5 months ago
Join us for an exclusive conversation with Aaron Tang, APAC General Manager of Luno, as we explore how cryptocurrency regulations are evolving globally and what it means for Malaysia’s digital asset space. With over a million Malaysian users, Luno is at the forefront of crypto innovation and compliance. We’ll discuss:
Malaysia’s regulatory direction
Building trust in high-risk markets
How clear rules can drive innovation
Malaysia’s regulatory direction
Building trust in high-risk markets
How clear rules can drive innovation
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NewsTranscript
00:00Alright, today we're going to dive into one of the hottest and most rapidly involving topics in the financial world, cryptocurrency regulation.
00:08As governments around the globe race to catch up with the pace of innovation, the questions remain,
00:13how do we strike the right balance between oversight and opportunity?
00:16Join us live in, is someone right at the heart of this conversation, is Aaron Tang,
00:21APEC General Manager of LUNO, one of Malaysia's leading digital asset exchange.
00:25With over a million users locally, LUNO has been a key player in shaping the crypto landscape here and across the region.
00:33I want to say thank you very much, Aaron, for joining me.
00:35Finally, from online-online, you have finally managed to come again to the studio.
00:39Thank you for having me, Nina. Thank you.
00:40Talking about the cryptocurrency, we can say that probably the most thing people will come to mind,
00:45what about the regulation? Is it safe? Is it risky?
00:50And talking about the regulations are rapidly evolving across the globe,
00:53how do you see the current regulatory landscape for cryptocurrency shaping up internationally?
01:00When we look at international, Nina, we can't avoid looking at the US,
01:03given what has happened over the last couple of months.
01:06So if I just rewind a little bit, so Donald Trump took over as the president,
01:11or he was announced as the incoming president, and he's known as a pro-crypto president.
01:16So he's actually quite different from previous administrations.
01:20And if you look at some of the acts that have been proposed in the US,
01:23for example, the Bitcoin Act last year, and then the Genius Act this year,
01:28I'll give a little bit of context on what the Bitcoin Act is.
01:31The Bitcoin Act is an act that proposes that the United States will hold a Bitcoin reserve,
01:37meaning it is part of their treasury.
01:40And then the Genius Act is actually giving some guidance along how stable coins should be regulated in the US.
01:48So I think these are some indications of what is happening in the US and also globally,
01:55because I think governments tend to see what each other are doing.
01:59And I think locally we do expect that there will be some further regulations and clarity along digital assets,
02:06given our Prime Minister, Dr Anwar, has also said that he's very interested to promote this kind of digital assets.
02:15And he also called for clearer guidelines within the cryptocurrency.
02:20In your view of POV, what a well-structured regulatory framework look like for Malaysia crypto market?
02:28We can say very suited also for Malaysia's landscape.
02:31Yeah, the thing to remember about Malaysia is we actually have quite a good regulatory regime regarding digital assets and crypto already.
02:39So kudos to our regulators.
02:41So let me give you some examples.
02:43For example, crypto exchanges are already regulated.
02:46So my company, the company where I represent, we are already regulated, meaning people can buy and sell crypto.
02:53Custodians are also regulated in Malaysia, meaning that if a company wants to hold and store digital assets for customers, they can do so.
03:01And then also fundraising for crypto is also regulated, meaning if I want to raise funds using digital assets, I also have a framework for that.
03:10Now, I will say that there are some areas for growth.
03:12So, for example, I think people, everyone is waiting regarding stable coins or payments regarding digital assets.
03:20That is something that there's not yet a lot of guidelines on.
03:24And then I think something quite interesting in the recent year is that the Securities Commission is looking to regulate, we call it tokenized securities or rather real world assets.
03:35So, for example, let's say a Maybank stock or Tenaga stock or any stock, we want to make it a token.
03:41How do we regulate that?
03:42And it's not easy.
03:43Probably you see the difference of trending within the cryptocurrency in the market from pre-pandemic, during COVID and the behavior or the patterns within the cryptocurrency markets.
03:54Probably it's probably a bit different now.
03:56Now, you share just Donald Trump with the pro-Bitcoin.
04:00And we know about the compliances play a key role in building trust, especially in a very high-risk sector like cryptocurrency.
04:08Maybe share with us throughout the whole journey, how does Luna ensure a compliant trading environment for over a million Malaysian users?
04:18Probably you can share with us this step or process before and post-pandemic.
04:23Yeah, thanks, Dina.
04:25So, I just want to bring back to what you said, pre- and post-pandemic.
04:29So, we were regulated starting 2019, 2019 just before the pandemic, right?
04:34Pandemic was March 2020.
04:36And firstly, congratulations, you made it to this year.
04:40So, before pandemic, I would want to look at that from, I would say, pre-regulation because 2019, 2020.
04:47So, before regulation, we were actually active already in the market.
04:51So, when we say pre-regulation, meaning that we were operating under a regime where it was a bit unclear.
04:58However, even at that point, we were already operating according to the highest standards.
05:03And let me share some of the standards that we operated even before the guidelines.
05:08So, for example, we had to identify all our customers.
05:12So, the official term is KYC, know your customers.
05:16And then we had to do things like monitoring transactions, making sure that people are not sending crypto to, say, terrorists or illegal organizations and so on.
05:25And then, besides that, we, of course, have to make sure that the market is operating under fair rules, meaning that people are not manipulating the market and so on.
05:34So, we actually had all those things in place before the pandemic itself.
05:39And then when the regulations came, we were pleasantly surprised because many of the things that we were practicing were also in the regulations.
05:46And then that's when the licensing process happened.
05:49Following that, we were able to obtain the first license and then we've been operating under the license regime ever since.
05:56So, I think the things that we've been operating, I want to talk about a couple of standards.
06:02So, we've spoken about the compliance standards, for example, the transaction monitoring and then making sure that people are not sending illegal transactions.
06:11But there's also, I would call it operational procedures to make sure that our employees are safe and our customers are safe.
06:20So, I'll give you some examples.
06:21For example, in terms of data privacy, we follow according to the PDPA, the Malaysian Privacy Standards.
06:28And, of course, being a UK-based company, HQ, we also follow some of the principles of GDPR, which is the European Standard for Privacy.
06:36It's not an easy journey, but you've made it through this part.
06:42Just before pandemic, you started your business and then going into pandemic.
06:46So, we can see this is a story or journey of how you make it through one of the biggest struggles of this decade, actually.
06:53Maybe some investors are still hesitant, citing regulatory uncertainty because when there's uncertainty, they need more clearer guidelines, clearer standards, procedure.
07:05And what are some of the steps that LUNO has taken over the years, not to just meet but exceed their regulatory expectation locally and even across the whole region?
07:16Yeah, when it comes to things like security and standards, we take it very, very seriously, Nina.
07:21So, for example, on our platform, we operate on the highest standards of security.
07:26I'll give you some examples.
07:28For example, we pre-screen CryptoSense.
07:31So, if you want to send crypto outside of LUNO, we pre-screen the addresses.
07:35So, we maintain a blacklist of known, for example, terrorists or known scams and so on.
07:42So, we actually block CryptoSense to those kind of addresses.
07:46We also have security standards such as the trusted devices or maybe many people call it like the secure to you kind of platform.
07:54So, we also maintain those kind of standards.
07:57I just want to say also that we have what we call a proof of reserves.
08:02So, a little bit of story.
08:03I think 2021, a couple of well-known crypto exchanges outside Malaysia, they actually ran into problems.
08:12So, a very well-known one is FTX.
08:14It actually eventually went into bankruptcy.
08:16Now, today in LUNO and several other crypto exchanges, we have what you call proof of reserves, meaning we actually get someone who is, for example, an audit company or something.
08:27They come, they actually look at our books, they look at all our crypto wallet holdings so they can give certainty and trust to the public.
08:34Hey, this company actually has all the crypto that it claims to have.
08:38Now, I would say that we are proud to be the leading one in Malaysia to actually have this proof of reserves and I think it gives a lot of trust and certainty to customers.
08:47And moving forward, definitely we are expecting so much more from cryptocurrency and much more on the clearer guidelines, standard operations, SOPs.
08:56What some of the, can you help us identify what some of the future or you foresee some of the challenges that might come up within the compliance practice?
09:05Is it so we can be really ready when there's a future problem or challenges within cryptocurrency markets?
09:13And then these are some of the trends that we need to take a look at and so we can make sure or ensure that our regulatory system are also ready.
09:22Yeah, so I'll start with the future trends.
09:25I think everyone today is talking about stable coins.
09:28So, stable coin is basically a crypto asset that's tied to a currency.
09:32So, for example, maybe one day there will be a Malaysian Ringgit stable coin.
09:36Currently in the market, USD stable coin is probably the most well-known.
09:40So, I think stable coins will be an interesting one to see how the regulators want to integrate that to the financial system.
09:47Apart from that, we've also spoken about tokenized securities and real-world assets.
09:52I think that's going to be a continued trend because more and more assets, they're calling it tokenized on the blockchain.
09:59Even the largest asset managers such as BlackRock are talking about tokenized assets.
10:04And if we talk about local compliance regulation and challenges, I just want to pull one from the current digital asset exchanges that we're facing today.
10:14I think today still we lack really, really good integration with the banking system in Malaysia.
10:20So, for example, many digital asset exchanges sometimes face problems with getting banking facilities and so on.
10:27So, I would say that's more of a wish list for the industry.
10:30If we have regulations or support from the banking industry for the digital asset exchanges, that would be amazing because it would allow more Malaysians to have access to digital assets.
10:39And that is one of the biggest, most important component when talking about the cryptocurrency.
10:44Probably lastly, what's your advice in the future?
10:48How do you see this clear regulation?
10:50Maybe people don't understand how clear policy or we can see the guidelines that will also ensure from safety more than jump into risk.
11:01This is especially for the long-term growth.
11:04How do you see, what are some of the impacts that maybe some people out there, especially business, doesn't understand that clearer regulations can impact innovation in the long run?
11:14Maybe some of them said this regulation will block us from creativity or innovation.
11:19But what's your thought on that?
11:21I think ultimately regulation, it gives clarity.
11:24So, it's like if you're playing a game, you need to know the rules, right?
11:27Because without knowing the rules, then it's very unclear.
11:30And I think we have several examples of how regulation gives clarity and it leads to progress.
11:36Example number one, Malaysia is actually quite fast in regulating digital asset exchanges.
11:41We were actually faster than Singapore.
11:42Back in 2019, we already have guidelines.
11:45So, actually with these guidelines, it helps develop the industry, meaning that local Malaysians have access to digital assets in a safe way.
11:52So, for example, if those regulations do not exist, people today cannot buy from onshore exchanges.
11:58They have to go to somewhere offshore.
12:00Okay.
12:01So, I think apart from that, right, if your question around like security and so on, I think the sort of trick to that is let the regulated industry handle all the compliance, all the regulations with the regulators.
12:14I would like to see the end users, for example, consumers and businesses.
12:17If you do business with the digital asset exchanges that are regulated, then you're going to be compliant and you know that it's safe and secure.
12:24So, let's go.
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