Bursa’s rejection of crypto may put off young investors
Published on: Saturday, March 30, 2024
By:
Annabelle Lawrence, FMT
Bursa Malaysia has dismissed the idea of having cryptocurrencies on its multi-asset exchange. (Unsplash pic)
PETALING JAYA: Bursa Malaysia’s decision to exclude cryptocurrencies (crypto) on its multi-asset exchange may hamper it from attracting young working adults who are increasingly seeing crypto as an alternative investment class, says an industry player.
Cryptocurrency investment firm Luno Malaysia’s country manager Scarlett Chai said crypto is a volatile asset, offering both opportunities for investors to make gains and potential for losses.
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“While we applaud the bourse’s efforts in driving financial inclusion via Bursa Gold Dinar, we believe crypto is another form of asset class that when paired strategically with other asset classes, it promotes wealth creation,” she told FMT Business.
As the country’s leading regulated digital asset exchange, she said Luno remains committed to advancing Malaysia’s crypto adoption through “responsible investing” via awareness, accessibility, and industry collaboration.
According to a New Straits Times report on March 25, Bursa Malaysia dismissed the idea of including cryptocurrency on its multi-asset exchange.
Its CEO Muhamad Umar Swift said the exchange looked into cryptocurrency offerings, along with exchange traded funds (ETFs), and chose not to go down that road as it was not in line with its goals.
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“Cryptocurrency is not a real asset, it does not have any intrinsic value. The exchange is designed to help people raise capital and it is not just about trading,” he added.
Bitcoin gets ETF boost
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Bitcoin, the world’s largest cryptocurrency, has surged to record highs this year after the US Securities and Exchange Commission (SEV) approved 11 spot bitcoin ETFs in January. The SEC had long rejected the products citing investor protection concerns, but was forced to rethink after losing a court challenge by Grayscale Investments.
Crypto enthusiasts say the ETFs will allow investors to more easily and safely gain exposure to Bitcoin. At the time of writing, Bitcoin was trading at US$70,385 (RM333,144) per coin, not bad for something that Umar claims is not a real asset and has “no intrinsic value”.
Meanwhile, Amsyar Raziq, a crypto investor for the past 15 years, has urged financial institutions and the government to understand what cryptocurrency entails and take the opportunity to grow the market by creating the right environment and policy to encourage innovation.
“Crypto is a programmable money and tons of its applications and utilities are yet to be discovered. Just like how it was with the internet 20-30 years ago.
“The vast majority of the crypto projects out there aren’t legit and just a money grab. I think it is the job of Bursa Malaysia and financial institutions to understand which one (crypto) is here to stay,” he told FMT Business.
Dismissing crypto slows innovation
Amsyar, who is also an accountant by profession, said that dismissing crypto does not help and will likely slow down innovation which could have taken place in the country.
“If we never start, the industry will just keep on growing. It’s just a matter of time that Bursa will eventually need to accept what the market demands,” he told FMT Business.
He hopes Bursa’s decision is only short-term as the US has already approved spot Bitcoin ETFs after years of consideration.
A spot bitcoin ETF tracks the spot or current price of Bitcoin. By holding an equivalent amount of Bitcoin to back every share of the ETF that is sold, the fund is backed by the cryptocurrency itself.
Launched in 2009, Bitcoin currently stands in ninth place of the world’s top assets at US$1.38 trillion (RM6.53 trillion), with gold taking first place at US$14.55 trillion (RM68.9 trillion).
Amsyar noted the US SEC’s approval of Bitcoin ETFs signals a positive shift in how traditional investment institutions view crypto, as another form of asset.
“As the crypto ecosystem continues maturing, we believe it will be a matter of time before we see more integration between TradFi (traditional finance) and DeFi (decentralised finance),” he added.
Bait Al Amanah analyst Yugendran Sivakumaran said Bursa Malaysia rejecting the idea of incorporating crypto on its multi-asset exchange was due to cryptos’ highly decentralised nature and volatility.
“Cryptocurrency is very different from other assets such as gold. It lacks a physical form to hold value,” he said.
“Yes, the Securities Commission permits operators of cryptocurrency markets, but Bursa’s ideals are to assist Malaysians in accruing wealth in a relatively safe environment, which is something crypto cannot provide,” he said.
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