Written by: Wu Says Blockchain
The content of this article comes from the roundtable discussion at the Finternet 2025 Asia Digital Finance Summit titled "Asian Crypto Frontier: Balancing Regulation and Compliance Growth," hosted by Angelina Kwan, Managing Director of Stratford Finance. The guests included Wong Huei Ching, Director of Digital Financial Assets and Crypto Assets Regulation at the Indonesian Financial Services Authority (OJK), Uli Agustina, Director of Digital Financial Assets and Crypto Assets Regulation at the Indonesian Financial Services Authority, and Harry Kim, Chief Business Officer of Kintsugi Technologies in South Korea.
The Finternet 2025 Asia Digital Finance Summit was held on November 4 in Hong Kong, centered around the theme "Connecting Chains, Building the Future," supported by over 10 institutions including OSL Group, the Hong Kong Invest Hong Kong, the Hong Kong Financial Development Council, and Hong Kong Cyberport.
Audio transcription completed by GPT, errors may exist. The views of the guests do not represent the views of Wu Says. Readers are advised to strictly comply with local laws and regulations. Please watch the full content on YT:
Asia's Regulation at the Forefront, Promoting the Standardized Development of the Crypto Market
Angelina Kwan: I just returned from Korea Blockchain Week, and the enthusiasm there was astonishing. During the event, the Korea Exchange was urged by various parties to launch ETPs (Exchange-Traded Products) as soon as possible, with everyone saying "Hong Kong is already ahead," which put a lot of pressure on them. Now that Korea has a new president, they are quickly pushing forward the Digital Asset Basic Act (DABA), and we see relevant regulations gradually taking shape. Harry, can you talk about the current regulatory progress in Korea and how Hong Kong might be involved?
Harry: Korea indeed has 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," which were previously referred to as "virtual assets," to more clearly regulate and supervise them.
Regulation is currently entering its second phase, which will cover not only exchanges but also custodians, stablecoins, advisors, marketing, and other participants. 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 Korea, promoting or amending new laws usually takes a long time: first, there is about a year of review, followed by a year of trial implementation, and only then will it be officially implemented. So the whole process typically takes one to two years.
Angelina Kwan: That also means Hong Kong has time to maintain its lead, which is a good thing. For those looking to expand from Hong Kong to Korea, now might be the opportunity window.
However, I believe Korea's infrastructure is still not fully developed. Hong Kong already has licensed exchanges that can support the structuring of products and the launch of ETPs, and we are far ahead in this regard. If Korea wants to launch ETPs now, they still need to establish a complete support system.
When we spoke with several guests in Korea, we also assessed that the Korea Exchange (KRX) is likely to launch ETPs within a year. I believe the Korean regulatory authorities will accelerate their pace this time, and we cannot relax.
Malaysia's Crypto Regulatory Evolution Since 2019
Angelina Kwan: Dr. Wong, could you introduce the recent developments in Malaysia's regulatory mechanisms?
Wong: Malaysia incorporated crypto assets into its securities regulatory framework as early as 2019. Over the past five to 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 the demand for more complex products is also rising.
Based on this, we decided to upgrade our regulatory guidelines, which we expect to release early next year. The new regulations will grant exchanges more autonomy, moving away from a "nanny-style" intervention by regulators. Exchanges will be able to independently decide on the listing of token products based on their governance mechanisms.
Of course, this delegation of power means greater responsibility. We require exchanges to strengthen internal controls regarding investor protection, including wallet custody arrangements, capital requirements, and more. The overall goal is to promote institutionalization in the market, attract more large financial institutions, and enhance the credibility of crypto assets within the banking system.
To this end, we have held meetings with the central bank to facilitate in-depth dialogue between traditional banks and the compliance teams of crypto platforms to bridge the gap of trust and understanding.
Currently, there are 21 institutions active in Malaysia's crypto ecosystem, covering crypto funds, derivatives, trading platforms, and upcoming brokerage services. We also allow local brokers to connect to global liquidity pools to provide better prices for clients.
Another focus is asset tokenization. We hope to bring the advantages of the crypto market into traditional capital markets, so we are developing relevant regulatory guidelines to clarify the responsibilities of issuers and intermediaries and promote the standardized development of the industry. Last year, the industry was almost indifferent to this topic, but this year the response has been enthusiastic, with the central bank also releasing discussion papers, indicating a strong consensus.
In this regard, we have established a sandbox mechanism to promote a full-process pilot from asset tokenization to payment settlement, further exploring innovative financial applications.
Angelina Kwan: While this may not entirely fall under your regulatory responsibilities, I would like to understand the movements of Bank Negara Malaysia regarding stablecoins. Stablecoins are currently a hot topic in the market, especially in asset tokenization, where they may become a primary payment tool. Are you working with the central bank to develop a regulatory framework for stablecoins? Additionally, there are some unlicensed stablecoin products in the market, which pose both risks and payment opportunities. What is your view 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).
A few months ago, the central bank launched a sandbox mechanism, welcoming companies to submit real application cases to test MYR-supported stablecoins. I have also been encouraging participants in the capital markets and crypto sectors to actively explore this direction.
We believe that if we can prove that there is genuine market demand for MYR stablecoins, discussions about promoting other foreign currency stablecoins will proceed more smoothly in the future. Ultimately, the key is whether there is practical use.
Indonesia's Regulatory System Reform: Crypto Asset Regulation Transferred to OJK
Angelina Kwan: Indonesia's digital asset market has grown rapidly, and the ecosystem is very active. Can you share with everyone the reasons for the rapid development of the Indonesian market and some of your core regulatory strategies in promoting the compliant development of the crypto industry?
Uli: These advancements are inseparable from strong government support. 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 authority transfer—moving the regulation of crypto exchanges and related ecosystems from the Ministry of Trade to the OJK for unified regulation, placing crypto businesses alongside other financial services.
We focus on building a stable and compliant market environment, strengthening risk governance and consumer protection mechanisms. Indonesia's ecosystem has its local characteristics: we have a regulatory committee, a classification system, and a clearing institution responsible for the clearing and settlement of crypto transactions.
We promote the integration of the banking system with crypto trading, for example, all transactions must go through banks. We have also established an official custody institution, requiring 70% of user assets or wallets to be held there to ensure asset security. While not all platforms can meet this requirement from the start, we are pushing them to gradually comply to enhance market trust.
We have also released a series of new regulations aimed at ensuring that crypto assets are not merely speculative tools but genuinely participate in the national digital economy. For instance, one project tested in the sandbox uses blockchain technology to record data on dairy farming in Java, establishing credit for farmers who previously could not obtain loans, thus enabling financing. Such projects have already connected with banks, helping them transition from "uncreditworthy" to "creditworthy."
We are also promoting tokenization projects for assets such as real estate, gaming, and IP, expecting these innovations to be rolled out gradually. As regulators, we strictly review the capital and governance structures of platforms, looking forward to their future participation not only in secondary market trading but also in ICOs or IPOs.
Angelina Kwan: Have you encountered any challenges in regulating these companies? How did you respond?
Uli: Certainly, especially in terms of cybersecurity. There have been some significant incidents that exposed weaknesses in the infrastructure. To address this, we collaborate with multiple departments, not just OJK acting independently. We invest resources in education and capacity building and partner with Indonesian universities to cultivate blockchain engineering talent.
In terms of systems, we have incorporated cybersecurity into the overall regulatory framework and established an emergency response mechanism. We work with the central bank to conduct joint reviews and audits of transactions involving banks and payment gateways to ensure the system is secure. In the event of a security incident, we can respond quickly to minimize the impact.
Perpetual Contracts and ETPs: Compliant Exchanges Accelerate Entry
Angelina Kwan: We are now seeing a clear trend where traditional finance in various countries is actively entering the crypto asset space. I just attended a meeting 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 the regulators pushing forward; traditional exchanges are also rapidly entering the market. For example, the Korea Exchange (KRX) recently held a meeting lasting five to six hours specifically to discuss how to launch ETPs (Exchange-Traded Products) on traditional exchanges in the future. This indicates that regulatory authorities and market forces are accelerating convergence, pushing the crypto market towards compliance and institutionalization.
Harry, Korea has strong cultural assets, such as idol groups like BlackPink. KRX now wants to tokenize these cultural IPs. What is your view on this trend? Are there any related explorations in Indonesia and Malaysia regarding cultural asset tokenization?
Harry: Yes, Korea is opening up the tokenization market, but the legal foundation is still not perfect. First, there is the tax issue—currently, Korea does not have a clear tax framework, lacking regulations on crypto asset trading and management. If there is no clarity on how to tax, it is difficult for businesses to operate with peace of mind.
Angelina Kwan: Hong Kong does not have taxes in this regard.
Harry: Unfortunately, Korea is about to start taxing, with rates expected to be between 20% and 25%, likely implemented as early as next year. Clarity on taxation will be the first step in promoting market development, clearly defining the tax obligations of individuals and businesses regarding crypto assets.
The second step is legislation. The Basic Act on Digital Assets is currently under review, which includes provisions for custody mechanisms. Custody and wallet security are critical aspects. The regulatory framework for exchanges has been completed, and once these laws are enacted, KRX can officially launch larger-scale tokenization projects.
Malaysia's 2026 Outlook: Promoting More Tokenized Products and Large Institutions Entering the Market
Angelina Kwan: Please share your expectations for 2026. What developments do you hope to achieve or promote in your domestic market?
Wong: I expect that in the short to medium term, there will be more products launched, not limited to tokens listed on exchanges. We have received positive feedback from many traditional financial institutions, including brokers and fund managers, who are actively preparing for the issuance of tokenized or crypto-related products, which is a direction we are very much looking forward to next year.
We also anticipate that more large institutions will enter the Malaysian market, with several already actively reaching out. Additionally, in terms of asset tokenization, we are collaborating with the national sovereign wealth fund Khazanah to promote its bond tokenization project, which is expected to launch next year. We are also in discussions about some public-private partnership projects, which are still in the dialogue stage but are progressing positively.
Angelina Kwan: You are still the first country in Asia to issue compliant custody licenses, which is very advanced.
Wong: Yes, we have indeed established a regulatory system for digital asset custodians and have issued three licenses so far. We are also working with local banks to encourage them to enter the custody business. The overall feedback has been very positive, and many banks are developing relevant plans. We believe that custody services will further support the development of Malaysia's crypto and tokenization market.
Indonesia 2026 Outlook: Derivatives Regulatory Reform and Innovation Sandbox Accelerating Implementation
Angelina Kwan: What are the key plans for Indonesia next year? What new goals do you have in terms of products and services?
Uli: We plan to comprehensively enhance the operational level of exchanges in 2026, with new regulatory requirements expected to be introduced, focusing on strengthening risk governance and investor protection mechanisms at exchanges to improve market stability and sustainability.
Next year, we will also further promote the regulatory framework for derivatives trading. Currently, this part is regulated by commodity trading agencies, and we hope to integrate it into a unified platform and regulatory system consistent with crypto assets for consolidated management.
In terms of innovation, we will accelerate the implementation of multiple projects under the regulatory sandbox mechanism, with several projects already entering the evaluation stage and expected to be officially launched next year. Tokenization of real estate, gold, and government bonds are all key directions we are promoting.
Our overall goal is to make the digital economy an important pillar of the national economy. Therefore, we will further strengthen the connection with the traditional financial system, including banks, payment gateways, custodians, and other key links. We also encourage more token issuance (ICO) projects to enter the market.
In terms of foundational systems, we will enhance financial reporting and assessment capabilities. We have already released a notice on the accounting treatment of crypto assets and hope to gradually align with international accounting standards in the future.
Finally, in terms of anti-money laundering, we plan to strengthen cooperation with neighboring countries to prevent regulatory arbitrage, especially when wallets are stolen or funds are transferred across borders, establishing a more effective regional linkage mechanism to enhance rapid response capabilities to cybersecurity incidents.
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