Cryptocurrency Trading Surges in Malaysia as Lockdown Cripples Economy
Cryptocurrency trading in Malaysia has surged as the country endures an extended lockdown, costing its economy an estimated $550 million a day. Regulated cryptocurrency exchanges are reporting substantial growth in trading volumes and new users as people seek “a good store of value in difficult economic times.”
Increased Crypto Trading Volumes and New Users
Interest in cryptocurrency has grown significantly in Malaysia amid the extended lockdown restricting travel and nonessential businesses. The country estimates that 2.4 billion ringgit ($553 million) are lost each day that businesses remain shut due to the coronavirus pandemic.
Despite the worldwide economic crisis, cryptocurrency trading in Malaysia has shown strong growth, according to two government-approved crypto exchanges. Luno, Malaysia’s first fully approved digital asset exchange, told The Malaysian Reserve publication that local trading volumes on its platform grew 33% over the past four weeks. Luno Malaysia manager Aaron Tang said the number of active users on his exchange hit a record high during that period. “There are a plethora of digital coin investors in Malaysia,” Tang told the news outlet, elaborating:
We believe the surge is partly driven by the belief that cryptocurrencies (particularly bitcoin) are a good store of value in difficult economic times.
The Luno manager explained that some investors are using cryptocurrencies, such as bitcoin, to diversify their portfolios, because they are worried that huge stimulus packages and the global economic crisis could lead to inflation.
The second fully approved cryptocurrency exchange operator, Tokenize Technology, has also experienced an increase in user signups. CEO Hong Qi Yu told the news outlet that his platform is seeing an average daily trading volume increase of 30% to 40%.
“We are quite fresh but see that Malaysians are quite eager to sign up,” he was quoted as saying. However, he added that most people are still taking a wait-and-see approach when it comes to cryptocurrency investing, estimating that only 2% of Malaysia’s population of over 30 million has adequate cryptocurrency knowledge.
Malaysian Cryptocurrency Regulation
Malaysia’s securities commission (SC), Suruhanjaya Sekuriti Malaysia, started regulating the country’s cryptocurrency industry on Jan. 15 last year, when “the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019” went into effect.
The Commission approved three cryptocurrency exchanges conditionally last year: Luno Malaysia, Sinegy Technologies, and Tokenize Technology. Luno soon met the regulator’s requirements and became the first exchange to receive full approval. Earlier this month, Tokenize Technology also met the requirements.
Suruhanjaya Sekuriti Malaysia clarified when the regulation went into effect: “Entities which have not been approved by the SC, including those which have previously been operating under the transitional period, are required to cease all activities immediately and return all monies and assets collected from investors.”
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