KUALA LUMPUR: A homegrown cryptocurrency exchanger is launching a revamped version of its trading venue, targeting strong market appetite for the alternative asset class, amid increased regulatory scrutiny on the sector.
Ipoh-based Pinkexc Sdn Bhd founder and chief executive officer Fakhrul-Razi Abu Bakar said the new platfom is scheduled to go live in February, six months after he took it offline to facilitate a major upgrade of its system.
“We have expanded our system capabilities and we are confident that the platform will be at par with the best out there,” he told StarBiz.
Pinkexc is seeking to fill the gap in the market after popular exchanger Luno said on Jan 12 that it was unable to processs deposits and withdrawals in Malaysia following a move by the Inland Revenue Board (IRB) to freeze its bank accounts.
The IRB was reported to have said that while the cryptocurrency business was an unregulated industry in Malaysia, it was subject to Malaysian income tax.
A conservative estimate put the average monthly trading turnover of bitcoin and other digital currencies in Malaysia at around RM75mil.
At least one exchanger, according to a StarBizWeek report, had handled a trading volume of some RM500mil from Malaysian trades last year alone.
There are four crypto exchangers operating in Malaysia, including London-based Luno and Pinkexc. To compare, there are more than 10 exchangers operating in neighbouring Singapore.
Fakhrul said Pinkexc is the only Malaysian-owned exchanger in the country and has been in the digital currency exchange business since 2016.
The new Pinkexc trading venue, he said, will feature six cryptocurrency trading pairs and three fiat money swaps.
“We are catering to what we see as a strong growing demand for alternative digital currencies, not just bitcoin, but also for litecoin and ethereum,” he said.
Bitcoin was born in 2009, but the digital currency gained mainstream notoriety in 2017 after surging from less than a US$1,000 per bitcoin at the start of the year to almost US$20,000 in less than 12 months.
It had stabilised, somewhat, last week and was trading at just below US$11,000 apiece.
“Last year had been a phenomenal year for cryptocurrencies, but you have to appreciate that it is still a relatively new asset class compared with other traditional investment products,” Fakhrul said.
Apart from operating a trading venue, Pinkexc, Fakhrul said he is also providing commercial and point-of-sale extension options for merchants as the company seeks to broaden the use of bitcoin in the real world.
The company has also set up a bitcoin automated teller machine (ATM) at its office in Ipoh and another one for a client in Ho Chi Minh City in Vietnam.
As it is, digital currencies such as bitcoin are not legal tender in Malaysia, but cryptocurrency exchangers are required to report their activities to Bank Negara.
The central bank, in December, said digital currency exchangers are categorised as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.
This reporting obligations, the central bank said, is the first step in making activities in the cryptocurrency business more transparent.
It does not, however, mean that entities engaged in this activity are required to be licensed, authorised or endorsed by the central bank.
Other reporting entities under this policy include accounting firms and real estate agencies, all of which are not under the purview of Bank Negara.
For exchangers like Pinkexc, which has been in business since 2016, such regulatory supervision is a positive development for the industry.
“For us, Malaysia has a unique opportunity to become a global hub for cryptocurrencies and blockchain technology,” Fakhrul said.