Early adoption will be a key differentiator in the race to lead SE Asia in digital asset exchanges - offering services such as the primary listing of securities, listing of alternative assets and secondary-market trading of security tokens and cryptocurrencies.
Distributed ledger technology is bound to revolutionise capital markets so that conventional and digital asset classes will eventually converge; and digital asset exchanges will provide the liquidity and efficiencies necessary to support this marketplace
with standardized processes, reduction of intermediaries, global 24/7 access, real-time settlements and lower costs of trading and custody.
Given that the Fintech sector is set for exponential growth, it is worth pointing out that Malaysia has some key advantages over its peers to develop the first Digital Financial Services Hub in the ASEAN region (with potentially a global reach).
Malaysia has English language and common law commercial platforms, strong and credible oversight by Bank Negara and the Securities Commission, a budding off-shore tax-efficient financial center in Labuan; and, most importantly, none of the legacy issues
of big money centers like Tokyo, Hong Kong and Singapore which have ironically made them inflexible to innovation and resistant to change - at least with respect to digital financial services.
The benefits of a Digital Financial Services Hub initiative are multiple for Malaysia and include:
• Positioning Malaysia as a leader in digital financial services especially within Islamic Fintech;
• Facilitating the development of local expertise in digital assets and services as well as attracting Fintech companies;
• Growing the GDP in the digital financial services space;
• Opening the door to an unlimited set of digital assets to be offered for trading over time;
• Enabling easy connection to other similar Hubs in the ASEAN region and other parts of the world.
Rather than lobby the government for a new Digital Hub, which would like be a long lead-time initiative, we can use existing infrastructure such as the Digital Free Trade Zone - launched in 2018 to great fanfare but since then underutilized - and combine
its facilities and incentives with the regulatory flexibility under LOFSA, for example. where the first digital asset exchange licenses have already been issued.
This would give us the early mover advantage and cultivate the ground for domestic startups, interconnect with regional hubs, and entice international players to choose Malaysia as the landing pad from which to grow out their Asia digital financial service
- By Hirander Misra, CEO of GMEX Group and Asad Sultan, CEO of Deutsche Malayan Ventures