SC to liberalise digital asset listing process

KUALA LUMPUR (Sept 25): The Securities Commission Malaysia (SC) is looking to further grow the digital asset market, partly through relaxing the approval process of the listing of digital assets on licensed exchanges.

Dr Wong Huei Ching, SC’s executive director responsible for digital strategy and innovation, said the digital asset market is still very small in size, less than 1% of the traditional capital market. But the regulator is aiming to grow the space, partly through liberalisation of the listing of digital assets.

“We need the market segment to grow, right? It is a market segment that we regulate and recognise... We are looking at liberalising products on the exchanges,” she said, during her panellist session at the Luno Institution Digital Asset Conference (Lidac).

Wong’s presentation slide also shows that the SC’s aims to “liberalise crypto listing process to accelerate time-to-market, without needing SC’s concurrence”.

Lidac is the first digital asset institution conference held locally by Luno, the first and largest licensed DAX in Malaysia.

However, the SC also wants DAXs to have stronger financial capability, higher personnel competency and better governance control. These are to enhance resilience of the market players.

“With great power comes great responsibility, which brings us to the second point. There’s a need for the [digital asset] market to be more resilient. We are talking about allowing exchanges to offer more products, which means it is imperative [for the SC] to look at how to protect investors better,” she said.

The SC had published a consultation paper to seek public feedback on proposed enhancements to its regulatory framework for DAX on June 30, with the consultation period having ended on Aug 11. Wong says the SC has put a lot of emphasis in the consultation paper for the DAXs to have greater institutional preservation. 

“We want the exchanges to have strong governance control. We want them to have strong capability. And we want them to have strong competency from shareholders all the way to the person-in-charge. That’s really important for us to ensure the [digital asset] market is resilient,” she said.

She added that a resilient market would also allow the digital assets industry to interface better with the broader financial ecosystem and lead to stronger ecosystem support.

The regulator also recognises that unregulated activity is an issue, she said, and there has been a lot of activity within the SC to look at stepping up enforcement actions. 

Capital market use cases are key to ringgit stablecoin
During her panellist session entitled “Regulating digital assets today, tomorrow and beyond”, Wong said capital market use cases are pertinent to the success of a ringgit stablecoin.

“The reality is that we need to think about what are the use cases for us? What are the things that are meaningful to be tokenised? Then only we can talk more about the success [of stablecoin]."

She said the SC has established a string of collaborations with the central bank on the Digital Asset Innovation Hub and Industry Working Group on Tokenisation. The latter is a working group to explore the use cases of tokenisation and risk management approaches.

There is the Blockchain and AI Advisory Council, a cross-agency coordination effort chaired by the Prime Minister, to align blockchain and AI technology adoption and policy. The SC and Bank Negara Malaysia are participating members of the council.

The SC is also working with the sovereign wealth fund Khazanah Nasional to pilot bond and sukuk tokenisation.

Moreover, Wong said the SC aims to issue new DAX guidelines this year, with a few public feedback still being deliberated.

“The guidelines on tokenisation should also be out by the end of this year. Multiple projects are on-stream. We are having interesting conversations with a couple of capital market intermediaries. And I’m personally quite excited about it,” she said.

The SC also introduced its regulatory sandbox last year to encourage securities tokenisation to help spur innovation in the capital market. “There are a few applications that come through... [the results] should be announced by the end of this year,” said Wong.