The development of financial technologies, particularly blockchains and cryptocurrencies, hinges significantly on how effectively the legal system adapts. While the legal status of cryptocurrencies remains ambiguous worldwide, Malaysia and Singapore offer distinctive approaches to cryptocurrency regulation.
According to Octa, a globally recognized broker, Malaysia ranked among the top 30 countries for cryptocurrency adoption based on transaction volume in 2023. Its peer-to-peer (P2P) exchange trade volume placed it 40th globally.
Malaysia’s Regulatory Framework
In Malaysia, digital assets are regulated under the Capital Markets & Services (Digital Currency and Digital Token) Order 2019. Although cryptocurrencies are classified as securities, they are not considered legal tender by Bank Negara Malaysia (BNM), the country’s central bank.
Companies dealing with digital currencies or tokens must register with the local authority. The regulations permit fundraising through token issuance, but require adherence to anti-money laundering (AML) and anti-terrorism financing policies. Despite these regulations, Malaysia’s legal framework still lacks transparency and consistency, which poses challenges for businesses navigating the sector. As the popularity of cryptocurrencies grows, new policies are anticipated, according to Kar Yong Ang, a financial market analyst with Octa.
Singapore’s Comprehensive Regulatory Approach
In contrast, Singapore stands out as a regional leader in cryptocurrency adoption. Nearly 49% of its population is aware of cryptocurrencies, and 12% actively own them. In 2023, Singapore attracted $627 million in crypto funding, supported by its skilled workforce and favorable fiscal policies.
Singapore’s regulatory landscape is well-established, enhancing its position as a global financial hub. The Payment Services Act (PSA), introduced in 2019, is the primary legal framework governing digital payment tokens (DPTs). It mandates licenses for activities such as operating exchanges and providing digital wallets.
Additionally, the Securities and Futures Act (SFA) regulates DPTs that resemble capital market products, while the Commodity Trading Act applies to asset-backed DPTs, treating them as commodities. This comprehensive regulatory approach ensures a structured environment for cryptocurrency activities, fostering innovation while maintaining security.
Singapore’s robust telecommunications infrastructure, highly skilled workforce, and favorable fiscal policies, including the absence of capital gains tax, make it an attractive hub for digital innovation. The country also boasts a thriving ecosystem of startups, accelerators, and incubators that drive innovation in the crypto sector.
According to Statista, Singapore’s cryptocurrency market is projected to grow by 8.79% annually from 2024 to 2028, reaching an estimated value of $479.5 million by 2028.
As the global landscape for cryptocurrency continues to evolve, the approaches taken by Malaysia and Singapore highlight the diverse regulatory environments shaping the future of digital assets.
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