Malaysia’s securities regulator has given preliminary approval for three companies, including the subsidiaries of Singapore and UK firms, to operate digital asset exchanges in the country.
They were selected from among 22 applicants, and have until the first quarter of next year to satisfy regulatory requirements to obtain full licences.
The three are Luno Malaysia, a subsidiary of London-based digital asset exchange Luno Money Ltd., Tokenize Technology (M) Sdn. Bhd., a unit of Singapore-based Tokenize Exchange, and homegrown SINEGY Technologies (M) Sdn. Bhd.
Securities Commission Malaysia (SC) says the firms have a maximum nine months to comply with all regulatory requirements in order to be granted full licences.
"DAX [digital asset exchanges] operators who have not been approved by the SC are required to cease all activities immediately and return all monies and assets collected from investors," the regulator says in a statement on June 4.
Malaysia is one of three Southeast Asian countries that are regulating the trading of digital assets, or cryptocurrencies. The others are neighbouring Singapore and Thailand, where digital exchanges are already operating after securing licences from the respective regulators.
Indonesia and the Philippines may soon join the group as regulators there have introduced frameworks and regulations relating to digital exchanges and trading of cryptocurrencies.
David Low, Luno’s general manager for Southeast Asia, says the company is "extremely grateful" to receive the conditional approval from the SC.
"It has been a long journey for Luno, from our entry into the Malaysian market in 2015, which led to us becoming, in just two years, the largest DAX in the country," Mr. Low says in a separate statement.
Meanwhile, sources in the financial technology industry who are familiar with the way the SC works tell Asia Asset Management that the unsuccessful applicants may still have a chance in future as more operators may be approved in coming years.
"Just like other initiatives such as equity crowdfunding and peer-to-peer lending, the SC has shown that it is open to introducing more players into the market, as long as the market is ready and the new players meet the requirements," one of these people says.
According to another person, the SC has in fact reached out to the 19 rejected applicants to explore new ideas to grow the digital asset exchange industry.
"So far, no official date has been set. I believe many of the DAX operators which did not get the approval will hope to get more clarity in the upcoming engagement," this person says.