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Halogen Capital founder and chief executive officer Hann Liew.
Speaking to StarBiz after the launch of SC’s Capital Market Masterplan 4 (CMP4) last week, Liew said simply adding more tokens to local exchanges would have only a limited impact.
“The top 10 cryptocurrencies by market capitalisation already account for 80% to 90% of all trading volume at most global digital asset exchanges.
“So, adding more coins to local exchanges will help, but it won’t move the needle on its own,” he said.
Halogen Capital is Malaysia’s first licensed digital asset fund manager. Instead, Liew said Malaysia should also focus on three bigger shifts that could materially strengthen digital assets as an investable asset class within the local capital market.
The first is to pave the way for Bursa Malaysia to offer digital assets.
He said such a move would be a major catalyst for the sector, given Bursa’s established role across securities, derivatives, bonds and, more recently, gold.
“Having Malaysia’s largest capital market offer digital assets would be the single biggest encouragement of the growth of the asset class, aggregating liquidity and order books across the current registered exchanges in Malaysia,” he said.
The second priority is for SC and Bank Negara Malaysia to provide clear regulatory treatment for US dollar-denominated stablecoins.
Liew said regulators should legally recognise such stablecoins as a form of private commercial paper that can be traded and custodied as a bearer asset.
“This matters because US dollar stablecoins are the primary trading pair for virtually all digital assets globally.
“Without them, you do not have access to global investors,” he added.
The third shift is to introduce domestic digital asset derivatives such as futures and options, which Liew said are essential if Malaysia hopes to attract more serious institutional participation.
“In global exchanges, derivatives volume is several multiples of spot trading. Futures and options are how institutional investors manage risk and build positions at scale.
“Without derivatives, Malaysia remains a retail-grade market when the larger opportunity is institutional as well.”
The comments come as SC signals a more flexible stance on digital token listings under CMP4.
SC chairman Datuk Mohammad Faiz Azmi said there are more than 4,000 digital tokens globally, and that the regulator is prepared to give local exchanges more leeway to decide whether a token is suitable for their customers, instead of requiring SC to act as the primary gatekeeper for every individual token.
Much like the planned push into exchange-traded funds, industry estimates suggest the move could help bring back part of the RM35bil in local funds now parked on global digital asset exchanges.
At present, cryptocurrency investments on domestic exchanges are estimated at around RM25bil.
The liberalisation push is also aimed at closing regulatory gaps and addressing market risks, while SC is seeking to adapt the segment towards a T-plus-now settlement regime.
Still, Liew argued that if Malaysia wants to win back capital flowing offshore, it must do more than broaden token access.
He said clearer rules for US dollar stablecoins and the introduction of digital asset derivatives would go much further in encouraging investors to shift back to regulated domestic platforms.
By most industry estimates, Malaysian investors already have three to four times higher holdings and trading volumes on foreign digital asset exchanges than on local ones.
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