This article is based on the roundtable discussion "Asia's Crypto Frontier: Balancing Regulation and Compliant Growth" at the Finternet 2025 Asia Digital Finance Summit. The moderator was Angelina Kwan, Managing Director of Stratford Finance, and the guests were Wong Huei Ching, Director of Digital Financial Assets and Crypto Assets Supervision at the Indonesian Financial Services Authority (OJK); Uli Agustina, Director of Digital Financial Assets and Crypto Assets Supervision at the Indonesian Financial Services Authority; and Harry Kim, Chief Commercial Officer of Kintsugi Technologies, Korea.
Asia's regulation is at the forefront, driving the standardized development of the crypto market
Kwan: I just returned from Korea Blockchain Week, and the enthusiasm there was amazing. During the conference, the Korea Exchange was also being urged by various parties to launch ETPs (Exchange Traded Products) as soon as possible. Everyone said, "Hong Kong has already taken the lead," which put a lot of pressure on them.
Now that South Korea has a new president and is rapidly pushing forward with the Digital Assets Basic Law (DABA), we are seeing related regulations gradually taking shape. Harry, can you talk about the current regulatory progress in South Korea and how Hong Kong might be able to participate? Harry: South Korea does indeed have a very active crypto retail market, and the new president has included digital assets in the national digital financial innovation plan. We are also pushing for a redefinition of "digital assets," formerly called "virtual assets," now shifting to "digital assets" for clearer regulation and oversight. Currently, regulation is entering its second phase, covering not only exchanges but also multiple participants such as custody, stablecoins, advisors, and marketing. Although the regulations have not yet been formally passed, the direction is clear: to establish a more comprehensive and detailed regulatory system to protect user interests and promote the standardized development of the market. In South Korea, promoting or revising new laws usually takes a long time: first, there's a review period of about a year, then a trial period of another year, and finally, formal implementation. So the whole process typically takes one to two years. Kwan Wai: That also means Hong Kong still has time to maintain its leading position, which is a good thing. For those hoping to expand from Hong Kong to South Korea, now might be the window of opportunity. However, I think South Korea's infrastructure is not yet fully developed. Hong Kong already has licensed exchanges that can support product structure splitting and the launch of ETPs; in this respect, we are far ahead. If South Korea wants to launch ETPs now, they still need to establish a complete support system. During our discussions with several guests in South Korea, we also predicted that the Korea Exchange (KRX) would likely launch ETPs within a year. I believe that South Korean regulators will accelerate their efforts this time, and we cannot afford to be complacent. The Evolution of Crypto Regulation in Malaysia Since 2019 Guan Hui: Dr. Wong, could you please introduce the recent developments in Malaysia's regulatory mechanisms? Wong: Malaysia incorporated crypto assets into its securities regulatory system as early as 2019. Over the past five or six years, we have gained a thorough understanding of locally registered exchanges and built confidence in them. Therefore, we conducted a phased assessment of the market this year and found that crypto assets have gradually become part of investment portfolios, while market demand for more complex products is also rising. Based on this, we have decided to upgrade our regulatory guidelines, which are expected to be released early next year. The new rules will grant exchanges more autonomy, eliminating the "nanny-like" intervention of regulatory agencies. Exchanges can decide independently to list token products based on their own governance mechanisms. Of course, decentralization means greater responsibility. We require exchanges to strengthen internal controls regarding investor protection, including wallet custody arrangements and capital requirements. The overall goal is to promote market institutionalization, attract more large financial institutions, and enhance the credibility of crypto assets within the banking system. To this end, we have held a joint meeting with the central bank to facilitate in-depth dialogue between compliance teams of traditional banks and crypto platforms, addressing the gaps in trust and understanding. Currently, there are 21 institutions active in the crypto ecosystem in Malaysia, covering crypto funds, derivatives, trading platforms, and upcoming brokerage services. We also allow local brokers to connect to global liquidity pools to provide clients with better pricing. Another key focus is asset tokenization. We aim to bring the advantages of the crypto market to traditional capital markets, and therefore are developing relevant regulatory guidelines to clarify the responsibilities of issuers and intermediaries, promoting the standardized development of the industry. Last year, the industry was largely indifferent to this topic, but this year the response has been enthusiastic, with even the central bank releasing a discussion document, demonstrating a strong consensus. In this regard, we have established a sandbox mechanism to promote pilot programs covering the entire process from asset tokenization to payment settlement, further exploring innovative financial applications. Guan Hui: Although this may not entirely fall under your regulatory responsibilities, I would like to understand Bank Negara Malaysia's moves regarding stablecoins. Stablecoins are currently a hot topic in the market, especially in asset tokenization, where they may become a major payment tool. Are you working with the central bank to develop a regulatory framework for stablecoins? Additionally, there are some unlicensed stablecoin products on the market, which present both risks and payment opportunities. What are your views on the situation in Malaysia? Wong: We have had extensive discussions with the central bank and other regulatory bodies regarding stablecoins. Overall, the central bank supports the development of stablecoins, especially those pegged to the Malaysian Ringgit (MYR). Several months ago, the central bank launched a sandbox mechanism, welcoming companies to submit real-world application cases to test MYR-backed stablecoins. I have also consistently encouraged participants in the capital markets and crypto space to actively explore this direction. We believe that if genuine market demand for MYR stablecoins can be demonstrated, future discussions on other foreign currency stablecoins will proceed more smoothly. Ultimately, the key lies in—whether there are practical uses. Indonesian Regulatory Reform: Crypto Asset Regulation Transferred to OJK Guan Hui: Indonesia's digital asset market has grown rapidly, with a very active ecosystem. Could you share some reasons for the rapid development of the Indonesian market, and some of your core regulatory strategies for promoting the compliant development of the crypto industry? Uli: These developments are inseparable from the strong support of the government. According to Indonesia's recent financial stability reforms, crypto assets have been officially classified as financial assets. We are also in a critical period of regulatory transfer—transferring the crypto exchanges and related ecosystem, previously regulated by the Ministry of Trade, to the OJK for unified regulation, allowing crypto businesses to be regulated alongside other financial services. We are focused on building a stable and compliant market environment, strengthening risk governance and consumer protection mechanisms. Indonesia's ecosystem has its own unique characteristics: we have a regulatory committee, a classification system, and a clearinghouse responsible for the clearing and settlement of crypto transactions. We are promoting the integration of the banking system with crypto trading; for example, all transactions must be conducted through banks. We have also established an official custodian institution, requiring 70% of user assets or wallets to be held there to ensure asset security. While not all platforms can comply initially, we are encouraging them to gradually meet the standards, enhancing market trust. We have also released a series of new regulations aimed at ensuring that crypto assets are not merely speculative tools, but truly participate in the national digital economy. For example, one project being tested in the sandbox uses blockchain technology to record data on Javanese dairy farming, building credit for farmers who were previously ineligible for loans, thereby enabling them to obtain financing. These types of projects have already connected with banks, pushing them from "unlending" to "lendingable." We are also promoting tokenization projects for assets such as real estate, games, and IP, and we expect these innovations to be implemented gradually. As regulators, we rigorously review the capital and governance structures of platforms, hoping they will not only participate in secondary market trading in the future but also play a role in ICOs or IPOs. Guan Hui: When regulating these companies, have you encountered any challenges? And how did you deal with them? Uli: Of course, especially in terms of cybersecurity. Several major incidents have occurred, exposing weaknesses in the infrastructure. Therefore, we are collaborating with multiple departments, not just acting independently. We are investing resources in education and capacity building, and collaborating with Indonesian universities to cultivate blockchain engineering talent. In terms of regulations, we have incorporated cybersecurity into the overall regulatory framework and established an emergency response mechanism. We are cooperating with the central bank to conduct joint reviews and audits of transactions involving banks and payment gateways to ensure the system is free of vulnerabilities. In the event of a security incident, we can respond quickly and minimize the impact. Perpetual Contracts and ETPs: Compliant Exchanges Accelerate Entry. Guan Hui: We are now seeing a clear trend: traditional financial institutions in various countries are actively investing in the crypto asset field. I just attended a conference where the head of a licensed exchange in Southeast Asia announced the launch of perpetual contracts (Perps), which are digital asset futures contracts listed on compliant exchanges. It's not just regulators pushing this; traditional exchanges are also rapidly entering the market. For example, the Korea Exchange (KRX) recently held a five- to six-hour conference specifically to discuss how to launch ETPs (Exchange Traded Products) on traditional exchanges. This indicates that regulatory and market forces are converging, driving the crypto market towards compliance and institutionalization. Harry, South Korea has strong cultural assets, such as idol groups like BlackPink. KRX now wants to tokenize these cultural IPs. What do you think of this trend? Have Indonesia and Malaysia explored cultural asset tokenization in this area? Harry: Yes, South Korea is opening up its tokenization market, but the legal foundation is still incomplete. First, there's the issue of taxation—South Korea currently lacks a clear tax framework and regulations governing crypto asset trading and management. If even how taxes are levied is unclear, businesses will find it difficult to operate with peace of mind. Guan Hui: Hong Kong doesn't have this kind of tax. Harry: Unfortunately, South Korea will soon begin levying taxes, with an expected rate of 20% to 25%, implemented as early as next year. Clear taxation will be the first step in driving market development, clarifying the tax obligations of individuals and businesses regarding crypto assets. The second step is legislation. The Basic Digital Assets Act is currently under review, including provisions for custody mechanisms. Custody and wallet security are crucial aspects. The regulatory framework for exchanges is now complete, and once these laws are implemented, KRX can officially launch larger-scale tokenization projects.
Malaysia 2026 Outlook: Driving More Tokenized Products and Large Institutional Entry
Guan Hui: Please share your expectations for 2026. What developments do you most hope to achieve or promote in the domestic market?
Wong: I expect more products to be launched in the short to medium term, not just tokens listed on exchanges. We have received positive feedback from many traditional financial institutions, including securities firms and fund managers, who are actively preparing for the issuance of tokenized or crypto-related products. This is a direction we are very much looking forward to next year.
Wong: I expect more products to be launched in the short to medium term, not just tokens listed on exchanges. We have received a lot of positive feedback from traditional financial institutions, including securities firms and fund managers, who are actively preparing for the issuance of tokenized or crypto-related products. This is a direction we are very much looking forward to next year.
We also anticipate more large institutions entering the Malaysian market, and several have already proactively approached us. Furthermore, regarding asset tokenization, we are collaborating with the national sovereign wealth fund, Khazanah, to advance its bond tokenization project, expected to launch next year. We are also in talks regarding some public-private partnership projects; although still in the dialogue stage, progress is optimistic. Guan Hui: You are also the first country in Asia to issue compliant custody licenses, which is very advanced. Wong: Yes, we have indeed established a regulatory framework for digital asset custodians, and have issued three licenses so far. We are also collaborating with local banks to encourage their entry into the custody business. The overall feedback has been very positive, and many banks are already developing related plans. We believe that custody services will further support the development of the Malaysian crypto and tokenization market.
Indonesia 2026 Outlook: Derivatives Regulatory Reform and Innovation Sandbox Accelerate Implementation
Guan Hui: What are Indonesia's key plans for next year? What new goals are there in terms of products and services?
Uli: We plan to comprehensively improve the operational level of exchanges in 2026. New regulatory requirements are expected to be introduced, focusing on strengthening exchange risk governance and investor protection mechanisms to enhance market stability and sustainable development capabilities.
Next year, we will also further promote the regulatory framework for derivatives trading. Currently, this part is regulated by commodity trading institutions. We hope to incorporate it into a unified platform and regulatory system consistent with crypto assets to achieve integrated management.
In terms of innovation, we will accelerate the implementation of multiple projects under the regulatory sandbox mechanism. Several projects have already entered the evaluation stage and are expected to be officially launched next year. Tokenization of real estate, gold, and government bonds are among our key areas of focus. Our overall goal is to make the digital economy a crucial pillar of the national economy. Therefore, we will further strengthen its connection with the traditional financial system, including key links such as banks, payment gateways, and custodian institutions. We also encourage more Initial Coin Offering (ICO) projects to enter the market. Regarding fundamental systems, we will strengthen financial reporting and assessment capabilities. A notification on the accounting treatment of crypto assets has already been issued, and we hope to gradually align with international accounting standards in the future. Finally, regarding anti-money laundering, we plan to strengthen cooperation with neighboring countries to prevent regulatory arbitrage, especially in cases of stolen wallets or cross-border fund transfers, by establishing a more effective regional coordination mechanism and enhancing our ability to respond quickly to cybersecurity incidents.
Miyuki
