Aaron Tang
KUCHING: As cryptocurrencies’ popularity continue to rise worldwide, proper regulations are needed as it could strengthen cryptocurrencies’ long-term growth ahead, cryptocurrency company Luno opined.
The latest cryptocurrency mining and trading regulations in China have caused a stir in the market. It is estimated that 90 per cent of the country’s mining capacity will shut down as a result.
This new regulation is significant news as 65 per cent of bitcoin mining occurs in China due to the wide availability of cheap electricity sources in several regions.
“Nevertheless, we believe that these regulations will strengthen bitcoin’s long-term growth.
“Increased mining decentralisation ensures that the bitcoin network is less vulnerable to the regulation of one country in the long term.
“Furthermore, the mining regulation in China presents an opportunity for miners to move to locations with abundant renewable energy sources such as El Salvador for its geothermal energy and Texas, US for its solar and wind power,” Luno Malaysia Country manager Aaron Tang said.
In Malaysia, Tang explained that Luno is working closely with the Securities Commission in helping it to understand the cryptocurrency industry better as it goes through the regulatory process.
“As a result, the Securities Commission was efficient in introducing cryptocurrency-specific regulation, and we are proud to have become the first registered cryptocurrency exchange in Malaysia.
“As a result, cryptocurrency has shown that it can exist in a fair and progressive regulatory environment. It is proven to be as we are now storing more than RM1 billion of digital assets on behalf of more than 300,000 customers and processing more than RM4.2 billion in 2021 – indicating a positive trend of cryptocurrency demand in Malaysia,” he said.
“For cryptocurrency, regulation is also crucial because it lays the groundwork to develop relationships with other industry players such as banking institutions. The advantage of having a regulated exchange is obvious; greater transparency and protection of consumers and a blueprint for further collaboration with regulatory bodies.
“Regulators like the Securities Commission and Bank Negara Malaysia are opening up the way for investors, traders, and individuals to maximise the benefits of a new financial system such as cryptocurrency,” he stressed.
Today, there are three approved digital asset exchanges in Malaysia, further showcasing the Malaysian regulator’s readiness to uphold the regulatory framework of the cryptocurrency industry in Malaysia.
“Regulation is necessary for the cryptocurrency industry. We believe that regulation will raise the bar in the industry, and, in our experience, this is also what customers want. It will continue to strengthen cryptocurrencies and encourage mass public adoption.
“We are building the bridge between what we have today and a future financial system that ensures faster, more secure, and more accessible transactions,” Tang remarked.
“Currently, we are in a mixed economy where we still heavily rely on existing financial infrastructure to make a move to a future system easier.
“For as long as we interact with the existing financial system, we will have to adapt and follow some of the same rules that apply to them.
“Cryptocurrencies are maturing from a self-regulated domain to a regulated one, where individuals and businesses can introduce aspects of cryptocurrency assets into their daily lives, with investments and payments.
“However, for this to happen, a relationship with local regulators needs to be built upon trust and a common goal to ensure a financial system that is beneficial to everyone regardless of their background,” he added.