An open letter to our Malaysian customers
Dear Luno customers,
We’re thankful for all your ongoing support, especially over the past few months, and want to take this opportunity to explain why deposits have not yet resumed in Malaysia. We will regularly update this page with the latest news on our progress until this is resolved.
2017 was a big year for cryptocurrencies and Luno. From the spike in Bitcoin price to investor interest generated the industry was in a bull market.
Quite naturally, this growth in trading and volumes attracted interest from banks and regulators. Particularly for large and high volume cryptocurrency exchanges like us.
Stringent policies affecting all cryptocurrency exchanges
In February 2018, Bank Negara Malaysia (BNM) issued a new policy requiring digital currency exchanges like Luno to implement measures against money laundering and terrorism financing activities. This includes transaction monitoring, reports on any suspicious transactions and monthly reports to BNM.
At Luno, we have a very strong compliance policy and culture that was established from the inception of our company. Hence, when the BNM reporting policy was announced, we were one of the first to register with them as a reporting institution.
Although we are now registered with BNM as a “Reporting Institution”, banks are still hesitant to work with us until the government create a regulatory framework and an official cryptocurrency exchange license to monitor exchanges.
Banks are learning how to work with cryptocurrencies
Money has evolved over thousands of years and continues to change. Banks understand that the potential for cryptocurrencies is huge and there are significant benefits for the adopters of this new financial system. However, banks operate in a highly-regulated environment, which predetermines their stringent approach towards any non-regulated businesses. Therefore, this transition will take time, as the industry evolves and involved parties define how to interact with each other.
We have been providing educational workshops for the government, banks and regulators to help them understand the nuances of the technology and its potential benefits, as well as getting them accustomed to the industry. We have also been actively lobbying for a cryptocurrency exchange license.
Government will regulate the cryptocurrency industry
Thankfully, the Minister of Finance Yang Berhormat Lim Guan Eng, has announced that the government will set up a new regulatory framework to approve and monitor “Digital Coin and Token Exchanges” in his recent Budget 2019 speech.
This means that cryptocurrency exchanges in Malaysia will be licensed and regulated under the purview of the Securities Commission. This is an extremely positive news from a very forward-thinking government who embraces new disruptive technology.
We welcome this announcement as we believe most of the innovation in the sector will come from cryptocurrency companies, financial institutions and regulators working together. At this juncture, we would like to thank the Ministry of Finance, Bank Negara Malaysia and Securities Commission for taking this important and innovative step in regulating and fostering the development of an extremely exciting industry.
Once a new regulatory framework has been set up, we will apply and obtain a license from the government. With a license, we will be able to re-activate deposits and allow you to trade cryptocurrencies again.
The cryptocurrency market is here to stay. If you’ve been following industry news, 2018 has seen many big financial players and institutions join the sensible revolution by accepting cryptocurrencies as a legitimate asset class. This marks a huge shift in the market from retail to institutional and provides a lot of credibility to the market overall. It will only continue to grow as cryptocurrencies enter the mainstream.
Being the largest and earliest player in the crypto space in Malaysia, Luno is committed to building and growing the cryptocurrency market here. We will keep you updated on our progress and hope to bring you good news within a few months. We’re here for the long haul and appreciate your continued trust and patience.
To the moon!
David Low, Malaysia Country Manager