It’s a long time coming, but Malaysian crypto exchange Luno Malaysia Sdn Bhd (“Luno”) is a step closer to becoming a Recognised Market Operator. In a blog post, Luno revealed that the Securities Commission (SC) of Malaysia has conditionally approved the company’s application as a Recognised Market Operator (Digital Asset Exchange).
Some believe that cryptocurrency, based on blockchain technology, is the future of money. The dramatic rise (and fall) of cryptocurrencies like Bitcoin and Ethereum have made investors and industry players both excited and wary. We’ve also seen the rise of crypto exchanges or digital asset exchanges that allow investors to buy, sell and store cryptocurrencies.
Countries around the world have taken steps to regulate cryptocurrencies and crypto exchanges, and Malaysian authorities are doing the same.
Luno is one of three crypto exchanges to receive conditional approval from the SC joining SINEGY Technologies (M) Sdn Bhd, and Tokenize Technology (M) Sdn Bhd. These three operators are given up to nine months to fully comply with all regulatory requirements prior to receiving a full license.
Crypto exchanges that are not approved by the SC are required to cease all activities immediately and return all monies and assets collected from investors. This includes the other 19 exchanges who previously applied for licensing from the regulator.
In January, the SC announced that the offering of digital assets and associated activities will require its authorisation and need to comply with relevant securities’ laws, beginning 15 January 2019–the date when the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 came into force.
SC’s guidelines states that companies dealing with digital assets will need to put in place anti-money laundering and counter-terrorism financing (AML/CFT) rules, cybersecurity and business continuity measures.
The guidelines will among others, establish criteria for determining fit and properness of issuers and exchange operators, disclosure standards and best practices in price discovery, trading rules and client asset protection,” the SC said.
For Luno, which established Malaysian operations in 2015, quickly propelled itself to become the largest digital exchange in the country in just two years. Its journey there though, hasn’t been without drama and hiccups. The company has seen its bank account frozen on several occasions, resulting in investors unable to deposit or withdraw funds into and out of their Luno wallets.
David Low, Luno’s General Manager of Southeast Asia said, “We’re committed to working with financial authorities, so it is very important to us that we’re now going to be regulated by the SC. We look forward to relaunching Luno so we’re available to all Malaysians once again.
Given that cryptocurrency is a nascent and mostly unregulated industry, it is vital for crypto exchanges like Luno to work closely with authorities like the Securities Commission, Internal Revenue Board (IRB) and Bank Negara (BNM) to help them understand the industry more broadly.
“We’ve been working closely with regulators and banks to complete the groundwork for the buying, selling and storing of cryptocurrencies and digital assets, which we believe are the future of money. Regulation will ultimately bring clarity and protection to consumers, and will ensure that all cryptocurrency businesses have adequate standards in place to protect investors and their funds,” he continued in his blog post.
He said Luno will be implementing some “exciting new changes” that will enhance the company’s service offerings as it prepares to relaunch the service to Malaysians some time in the near future.