- 4 hours ago
Malaysia now holds RM135 billion in e-wallet balances and much of it risks becoming unclaimed if owners pass away without digital-estate planning.
In this session, Niaga AWANI speaks with Aaron Tang, General Manager APAC Luno Malaysia about what really happens to your crypto, e-wallets and digital assets when heirs can't access accounts, why this problem is growing, and the simple steps every Malaysian should take to protect their digital wealth.
In this session, Niaga AWANI speaks with Aaron Tang, General Manager APAC Luno Malaysia about what really happens to your crypto, e-wallets and digital assets when heirs can't access accounts, why this problem is growing, and the simple steps every Malaysian should take to protect their digital wealth.
Category
🗞
NewsTranscript
00:00Today we discuss the growing risks of invisible money.
00:03Recent reports estimate some RM135 billion sits in Malaysian e-wallets.
00:08If account owners die or go offline, families may not be able to access those funds.
00:14Joining us is the General Manager APEC Luno Malaysia, Aaron Thang,
00:17to discuss how this plays out for crypto and other digital assets and what can be done about it.
00:22I want to say thank you very much, Aaron, for joining me.
00:24Headlines saying RM135 billion across e-wallets that could become unclaimed.
00:29From Luno's perspective, how big a problem is the invisible inheritance issue when it comes to crypto assets?
00:37Are you seeing many dormant or inaccessible accounts that could turn into unclaimed assets for hares?
00:43Morning, Nina. Thank you for having me.
00:46So it's quite an interesting problem that you mentioned because specifically in the digital asset world,
00:52actually this problem has existed for quite a few years.
00:57in the, I would say, in the unregulated digital asset space.
01:01So currently there are multiple ways to store your digital assets, your crypto.
01:05So for example, you could use a regulated platform like Luno.
01:09That's the easiest and most convenient way to store your crypto.
01:13But for many years before regulated exchanges came up,
01:16people were actually storing their digital assets, crypto on their hard drives.
01:20They were storing it on USB sticks and so on.
01:23So actually back in those days, when people lost access to their USB drive,
01:28or they forgot their passwords, or they, you know, they just switched computers and so on.
01:33Losing access to cryptocurrency was actually quite a common thing.
01:37And you'll see in some of the news headlines in the past,
01:41or a man has lost a hundred million, which is stuck in his hard drive in a,
01:45in a, in a trash, uh, dump, uh, what do you call that, uh, uh, dump somewhere.
01:51So that was what happened years ago.
01:54So, uh, I think interestingly with the, with the, what do you call it,
01:58approach of having regulated digital asset exchanges, regulated wallets today,
02:02um, this is one of the ways in which we can solve the problem.
02:07Because when you work with a regulated exchange and a regulated wallet and so on,
02:12if there is a problem with the account, or if somebody passes away,
02:16unfortunately, the family can actually approach the crypto exchange.
02:20And, uh, there are processes in place where the, the assets can pass on.
02:24So, um, it's quite a interesting problem because it's kind of the other way
02:28around in the crypto world.
02:29We used to have problems before, but now with our regulations,
02:32these are changing for the better.
02:35Uh, maybe the consumer from your explanation, we can see it's a bit complex
02:40for them to understand this because, uh, regulations is something that we have to
02:44adhere to.
02:44And unlike you all at site for numbers, crypto depends on keys, private credentials.
02:49Can you explain for viewers the practical differences between custodial services,
02:53exchanges like Luno and self-custody, private wallets, particularly in how each
02:58model affects and Harris' ability to recover funds after the owner dies?
03:03Sure.
03:04Definitely, Nina.
03:05So, uh, and it's, at its base, what do you call it?
03:07At its base technology, a crypto wallet is, uh, a piece of computer code.
03:13And to access that, that crypto wallet, you need what is known as a private key.
03:17So a private key is a piece of, uh, cryptographic information that with this
03:23private key, you would be able to access the funds in your wallet.
03:27Now there are multiple ways to, to store that, that, uh, private key.
03:30Now, something that we've mentioned previously, some people prefer to store
03:33this privately and that's totally fine, right?
03:36Some people are very, very good technologists.
03:38They're able to store that private key in a very secure manner.
03:42So maybe they use their very secure computer at home, or maybe they keep it in a safe or so on.
03:47So that's one way of storing the crypto assets.
03:51Now, the other way of doing it is to use a custodial service, custodial service, a custodial
03:56service is merely a company which is licensed or approved to hold the crypto or digital assets
04:02on behalf of the customer.
04:04So, uh, an example of that would be an exchange like Luno.
04:07We are allowed, or we are approved to hold the customer's digital assets, uh, private
04:12wallet, uh, private key, or, uh, there are also licensed digital asset custodians in Malaysia.
04:17They are licensed to be able to hold the, the private keys.
04:21So the, the interesting thing about these private keys is because it grants you access
04:26to your digital assets.
04:27That means that whoever holds the private key is actually, uh, very, very powerful because
04:32they, they, they actually control the assets.
04:35So, uh, again, imagine if you were an individual and you lost your private key, that's actually
04:41nobody that will be able to save you.
04:43If you are holding the private key yourself, however, if you're holding the private key
04:47with an institution, a licensed institution, so on, anything happens to that private, uh,
04:53what do you call that?
04:54That institution is responsible for that private key.
04:57So with a combination of, uh, security features and processes and procedures, the institutions
05:03have to make sure that even if you lost your password, for example, the private key is to
05:08start with the company and they will be able to help you retrieve your password and access
05:12to your funds.
05:14Uh, other than this errands, what also are the concrete features can exchanges, uh, implement
05:18to reduce the unclaimed risk like nomination fields, beneficiary registrations, dormant
05:23account workflows, also key legacy access processes.
05:25And has Luno implemented for piloted or piloted any of this?
05:31I think the number one thing that, uh, perhaps lacking today, not just for digital assets, I
05:36think even in, in the financial services is the process of actually transferring assets from
05:42one person passing on to their, their inheritors or the next generation.
05:47So, um, I think it starts with that, uh, having a very, very clear policy.
05:51So for example, at Luno, we have a very clear defined policy on our website, uh, in the event
05:56that somebody has passed on, the process is actually very clear, uh, what documents you
06:01need to submit, what documents from the courts that you need to prove that, okay, you are the
06:06rightful inheritance and so on.
06:08So I think this is something that, um, I think, you know, perhaps it is a bit of a taboo
06:12topic, right?
06:12Nobody wants to really talk about this, but it's something that I think as an industry,
06:17uh, you know, not just ourselves in the crypto industry, but I think all financial institutions,
06:22we can continue to, to, to spread the word about, you know, brace awareness about how
06:27actually the process of passing on is.
06:28And it's actually not a very, very, I would say it's not a very overly complex process.
06:35The, the only thing is that it takes time.
06:36So it can take quite a long time for the, the, the necessary documents to be issued
06:42from the courts or from the, uh, authorities to be able to prove that, okay, I'm the next
06:47of kin and I, I deserve this assets.
06:49And talking about authorities in between the individuals, we're also talking about authority
06:54within this platform, within this app, within this digital assets.
06:57And as you mentioned, it's not easy for transferring, uh, assets because a lot of security that we
07:02have to go through and a lot of confirmations.
07:04Uh, so where does the responsibility sit between providers and regulators?
07:10Should regulators like BNM mandate standards for digital asset succession or a nomination
07:15registry, which we know that they are doing right now, some of, uh, some of the focus or
07:20what practical regulatory changes would you like to see to protect consumers and their
07:24hairs?
07:24Yeah, this is, I think the, the, the current, uh, often the, the, the longest time lag at
07:32the moment is, uh, getting what we call, uh, uh, I believe it's called the, the letter
07:37of administration or a grant of probate.
07:39Now this document itself is the sort of key document that once you bring this document
07:44to a financial institution or you bring it to a company like Luno, then the process of
07:49actually giving the funds out to the customer is very fast, right?
07:52It can take a matter of days or perhaps a week or two, right?
07:56That process is actually quite easy.
07:58I think the, the challenge that we have, and I'm not going to assign blame to, to any particular
08:03party or, or anything, right?
08:05Because it is a complex legacy system from, from many, many years ago.
08:09And these, uh, regulations are created with, with the right intention in mind, right?
08:13And these are rules and laws that have been passed on for many, many years.
08:18Uh, that process of getting that document itself can be quite tedious in length.
08:22Well, maybe not tedious, but lengthy in process.
08:24So sometimes people say that it can take, uh, up to six to 12 months if you have a will.
08:30Now you already have a will.
08:31It can take you six to 12 months after somebody passes on.
08:35If you don't have a will that can take even longer.
08:37So, uh, again, I'm not a legal expert, but I think if the, if the, what do you call it?
08:42The infrastructure of the land or, or, or in Malaysia, we could find a way to make this
08:48process shorter while still being, uh, heavily secure and proper, then I think that will
08:53greatly improve the process.
08:54And for viewers who hold crypto on exchanges or in a wallet balances, one of the ways for
09:01security purpose, you have mentioned that it's very important for us to hold the key credentials.
09:05Uh, what are some, uh, the top five practical steps that you recommended today to make sure
09:10their loved ones can access those funds?
09:13I think the, the, the, the most important thing, especially if you're using, um, any financial
09:20institution is to have that will, that will, that basically explains, okay, what happens,
09:27uh, what, where my assets are, uh, it's not just about Luno, right?
09:31It's, you know, I have assets in this bank, uh, this institution, my insurance is this and
09:35this and so on.
09:36Um, if people were to clearly define that in a legal document or a will, uh, and I'm not saying
09:42that, you know, you, it has to be a super expensive will with lawyers and so on.
09:46I believe there are many financial institutions today that actually allow you to draft out
09:51a will for a somewhat reasonable price already today, right?
09:55So I think that would be something very, very powerful for people, uh, especially when you
10:00have dependents or especially once you reach a certain age or perhaps once you have a certain
10:04amount of assets, right?
10:05I think that would be something very powerful to have that will now specifically for customers
10:11who may be, uh, what do you call that, uh, custodizing their crypto assets themselves.
10:16Um, they have to understand that it is the next level of responsibility.
10:20So, um, I think, you know, people have used many ways, for example, having multiple copies
10:26of that private key.
10:28So for example, they may have one in one bank, they may keep another with their parents'
10:33home or they may keep another with a trusted friend or so on.
10:35And then of course, having very, very clear instructions for their family members.
10:40Okay.
10:41If this tragic scenario or this scenario that nobody wants to talk about, if that happens,
10:46what are the steps to be taken?
10:48So I think, for example, even if you were to have a will, right, it's not that easy for your,
10:53your next of kin to understand what to do if you don't leave them written instructions.
10:57So I think that's the sort of institutional part of it, having the proper documentation,
11:02but there's also the communication aspect of it to talk to your family and loved ones about
11:06what happens next.
11:08And talking about what happens that is very important.
11:11Uh, you, you also share with us, uh, the process of a digital asset is, it could be one of the
11:17challenges or one of the hardest part of it.
11:19And also the process may be from the legacy.
11:22If there's no will or there's any proper document, it may take longer for them to access.
11:26But also we have to think of the risk after, uh, the family, the loved one receive it.
11:31For example, like legacy access mechanism, we can see that can be misused if not designed
11:36carefully, for example, by coercion of fraud or by bypassing EML KYC safeguards.
11:43Your recommendation, how does Luna balance providing legitimate hair access while preventing
11:48fraud, money laundering, or even identity theft risk?
11:53Yeah, so we are guided by the regulations or the laws of the land.
11:57And, uh, so basically we follow the same, uh, guidelines and principles that are ascribed
12:02to financial institutions.
12:03So, uh, again, the, the, the proper letter of administration or grant of probate from the
12:08high courts and so on.
12:09So these are basically safeguards to ensure that somebody who actually comes or the administrators
12:15who comes to a company like Luna, and we've done this multiple times already.
12:19So we have a quite a good established process to, to be able to confidently say that, okay,
12:24this is indeed somebody who has passed on.
12:27This is indeed someone who did have an account with us.
12:29And this is indeed the next of kin that we need to pass the, the, uh, what do you call
12:33that?
12:33The, the assets onto.
12:34And usually what we find is we are not passing the assets on directly to a person, but we're
12:40also passing the assets on to a administrator of the estate.
12:44So it could be somebody who is also, uh, uh, representing the will, uh, or a trustee company.
12:51So it is quite a established process though, but I think practically speaking, ideally we
12:56want to get to a place where, you know, the, perhaps the, the, the rules, uh, can be, uh,
13:03further enhanced to make it a smoother and faster process.
13:06Because again, like I mentioned, even if a will, it could take six to 12 months for the
13:09entire process to, to, to, to follow out.
13:12Uh, and yeah, hopefully we get to a point where, you know, it can be faster and more
13:17seamless for the next of kin.
13:18Uh, Aaron, before we end our discussion, I want to add one more question.
13:22Uh, we can say that economies want frozen assets and unclaimed funds can depress
13:26productive capital.
13:27If Malaysia wants to avoid a new wave of unclaimed digital wealth, what are the things should
13:32industry regulators and civil society do?
13:34And what role will Luna play in making sure digital assets are part of responsible estate
13:39planning?
13:42Yeah, I think it starts with, uh, again, education and awareness.
13:45I think particularly in an industry like us, right?
13:48Uh, we are, I think the first Bitcoin was 2009.
13:51So maybe only about 15, 16 years.
13:54It's only really come into the mainstream over the last couple of years.
13:57So it's quite hard even for, you know, a 20 year old or 30 year old when they're thinking
14:03about accumulating wealth to be thinking about things like, oh, estate planning, what, what
14:07happens when I pass on and so on.
14:09But I think as the industry matures, uh, this is a matter of us continuing to work together
14:14as an industry.
14:15Um, you know, for example, right now we have, um, on material on our website, right?
14:21Luna, we have material on website on what happens if somebody passes on and so on.
14:25But I mean, I would love to see us take the next step in terms of bringing that message
14:29further out to, to people, not just about crypto assets, right?
14:33But to, to all, uh, financial institutions, to all financial assets.
14:37How can we, uh, as an industry continue to promote awareness of, uh, responsible, uh,
14:43what do you call that, uh, estate planning?
14:44And I think we also work together with financial advisors and so on.
14:48Uh, we constantly remind them that, hey, you know, if you start crypto with a company like us,
14:53their policies, their procedures, and, you know, please also continue to educate and encourage
14:57your, your clients, uh, because I think, um, estate planning, even for me personally,
15:03is something that often is an afterthought, but we do need to keep talking about it.
15:07And we do need to keep encouraging it.
Be the first to comment