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The content of this article comes from the roundtable discussion “Asia’s Crypto Frontier: Balancing Regulation and Compliance for Growth” at the Finternet 2025 Asia Digital Finance Summit. The host was Angelina Kwan, Managing Director of Stratford Finance. The guests were Wong Huei Ching, Director of Digital Financial Assets and Crypto-Asset Supervision of the Indonesian Financial Services Authority (OJK), Uli Agustina, Director of Digital Financial Assets and Crypto-Asset Supervision of the Indonesian Financial Services Authority (OJK), and Harry Kim, Chief Commercial Officer of Kintsugi Technologies in South Korea.
Asian regulation is at the forefront, promoting the development of crypto market regulations
Guan Hui: I just came back from South Korea Blockchain Week, and the enthusiasm there was shocking.During the meeting, the Korean Stock Exchange was also urged by all parties to launch ETPs (exchange-traded products) as soon as possible. Everyone said that “Hong Kong is already ahead”, which put them under great pressure.Now that South Korea has a new president and is rapidly promoting the Digital Asset Basic Act (DABA), we are seeing relevant regulations taking shape.Harry, can you talk about the current regulatory developments in South Korea and how Hong Kong might be involved?
Harry: South Korea does 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 re-legal definition of “digital assets”, which were originally called “virtual assets” and are now being shifted to “digital assets” for clearer regulation and supervision.
The supervision is currently entering the second phase, which will cover in addition to exchanges, custody, stablecoins, consultants, marketing and other participants.Although the regulations have not yet been formally adopted, the direction has been clear, which is to establish a more comprehensive and detailed regulatory system to protect the interests of users and promote the standardized development of the market.
In South Korea, promoting or revising new laws usually requires a long period of time: a review period of about a year, followed by a trial period of one year before formal implementation.So the whole process usually takes one to two years.
Guan Hui: That also means that Hong Kong still has time to maintain its lead, which is a good thing.For those who want to expand from Hong Kong to South Korea, now may be the window of opportunity.
But I think South Korea’s infrastructure is not perfect enough.Hong Kong already has a licensed exchange that can support the unbundling of product structures and the launch of ETPs. We are already far ahead in this regard.If South Korea wants to launch ETPs now, they still need to establish a complete support system.
When we communicated with several guests in South Korea, we also judged that the Korean Exchange (KRX) is likely to launch ETPs within a year.I believe the Korean regulators will step up this time and we cannot let up.
Malaysia’s crypto regulatory evolution since 2019
Guan Hui: Dr. Wong, can you introduce the recent progress in Malaysia’s regulatory mechanism?
Wong: Malaysia included crypto assets into the securities regulatory system as early as 2019. In the past five or six years, we have fully understood and built confidence in locally registered exchanges.Therefore, we conducted a periodic 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 the regulatory guidance, which is expected to be released early next year.The new regulations will give exchanges more autonomy and will no longer require “nanny-style” intervention by regulatory agencies.Exchanges can independently decide to list token products based on their own governance mechanisms.
Of course, delegating authority means greater responsibility.We require exchanges to strengthen internal controls in terms of investor protection, including wallet custody arrangements, capital requirements, etc.The overall goal is to promote market institutionalization, attract more large financial institutions to enter the market, and enhance the credibility of crypto assets in the banking system.
To this end, we have jointly held a meeting with the central bank to allow in-depth dialogue between the compliance teams of traditional banks and crypto platforms to resolve the gap between trust and understanding.
Currently, there are 21 institutions in Malaysia active in the 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 customers with better prices.
Another focus is on asset tokenization.We hope to introduce the advantages of the crypto market into the traditional capital market, so we are formulating relevant regulatory guidelines to clarify the responsibilities of issuers and intermediaries and promote the development of industry standards.Last year, the industry had little interest in this topic, but this year the response was enthusiastic. Even the central bank issued a discussion document, showing a strong consensus.
In this regard, we have established a sandbox mechanism to promote the pilot process of the entire process from asset tokenization to payment settlement, and further explore innovative financial applications.
Guan Hui: While this may not entirely fall within your regulatory responsibilities, I would like to know what Bank Negara Malaysia is doing with regard to stablecoins.Stablecoins are a hot topic in the market right now, especially in the tokenization of assets, and they may become a major payment tool.Are you working with central banks to develop a regulatory framework for stablecoins?In addition, there are also some stablecoin products on the market that have not yet been licensed, which is both a risk and a payment opportunity.What do you think of the situation in Malaysia?
Wong: We have had extensive discussions with central banks and other regulators about stablecoins.Overall, the central bank supports the development of stablecoins, especially stablecoins with the Malaysian Ringgit (MYR) as the anchor asset.
A few months ago, the central bank launched a sandbox mechanism, welcoming companies to submit practical application cases in which to test MYR-backed stablecoins.I have also been encouraging participants in the capital market and encryption fields to actively explore this direction.
We believe that if it can be proven that the MYR stablecoin has real market demand, discussions on promoting other foreign currency stablecoins will be smoother in the future.Ultimately, the key is whether it has any practical use.
Indonesian Regulatory System Reform: Crypto Asset Regulation Moved to OJK
Guan Hui: Indonesia’s digital asset market has grown rapidly and the ecosystem is very active.Can you share with you the reasons for the rapid development of the Indonesian market and some of your core regulatory strategies in promoting the compliance development of the crypto industry?
Uli: These developments are inseparable from the strong support of the government.Under Indonesia’s recent financial stability reforms, cryptoassets have been officially classified as financial assets.We are also in a critical period of transfer of regulatory power – the encryption exchanges and related ecosystems originally supervised by the Ministry of Trade will be transferred to the OJK for unified supervision, so that the encryption business will be supervised alongside other financial services.
We focus on building a stable and compliant market environment and strengthening risk governance and consumer protection mechanisms.The Indonesian ecosystem has its own local characteristics: we have a regulatory committee, classification system, and clearing agency responsible for the clearing and settlement of crypto transactions.
We promote the integration of the banking system with crypto transactions, such that all transactions must go through banks.At the same time, an official custody institution has been set up, requiring 70% of user assets or wallets to be hosted here to ensure asset security.Although not all platforms will be compliant at the outset, we are pushing them to gradually meet the standards and enhance market trust.
We have also issued a series of new regulations aimed at making crypto-assets more than mere speculative vehicles and truly participating in the country’s digital economy.For example, a project tested in the sandbox uses blockchain technology to record Javanese dairy cow breeding data to establish credit and obtain financing for farmers who were originally unable to get loans.Such projects have been integrated with banks, pushing them from being “unloanable” to “loanable”.
We are also promoting tokenization projects for real estate, games, IP and other assets, and it is expected that these innovations will be implemented one after another.As a regulator, we strictly scrutinize the capital and governance structures of platforms and expect them to not only participate in secondary market transactions in the future, but also play a role in ICOs or IPOs.
Guan Hui: Have you encountered any challenges when supervising these companies?How to deal with it?
Uli: Absolutely, especially when it comes to cybersecurity.There have been some major incidents that exposed the weaknesses of the infrastructure.To do this, we work together across multiple sectors, not just OJK acting independently.We invest resources in education and capacity building, and cooperate with Indonesian universities to cultivate blockchain engineering and technical talents.
In terms of institutions, we have integrated cybersecurity into the overall regulatory structure and developed an emergency response mechanism.Work with central banks to conduct joint reviews and audits of transactions involving banks and payment gateways to ensure there are no loopholes in the system.Once a security incident occurs, it can respond quickly and reduce the impact.
Perpetual Contracts and ETPs: Compliant exchanges are accelerating their entry into the market
Guan Hui: Now we see an obvious trend. Traditional finance in various countries is actively deploying crypto assets.I just attended a meeting where the head of a licensed exchange in Southeast Asia announced that it will launch perpetual contracts (Perps), digital asset futures contracts listed on compliant exchanges.
Not only are regulators advancing, but traditional exchanges are also beginning to quickly enter the market.For example, the Korean Exchange (KRX) recently held a five- to six-hour meeting to discuss how to launch ETPs (Exchange Traded Products) on traditional exchanges in the future.This shows that regulatory agencies and market forces are converging at an accelerated pace to push the encryption market toward compliance and institutionalization.
Harry, South Korea has strong cultural assets, such as idol groups such as BlackPink.KRX now wants to tokenize these cultural IPs.What do you think of this trend?Have Indonesia and Malaysia explored the tokenization of cultural assets?
Harry: Yes, South Korea is opening up the tokenization market, but the legal basis is not yet complete.The first is the tax issue—at present, South Korea does not have a clear tax framework and lacks regulations on the trading and management of crypto assets.If you don’t even know how to tax taxes, it will be difficult for companies to conduct business with peace of mind.
Guan Hui: There is no such tax in Hong Kong.
Harry: It’s a pity that South Korea will start to impose taxes soon. The tax rate is expected to be 20% to 25%, and it will be implemented as soon as next year.Tax clarity will be the first step in moving the market forward, clarifying the tax obligations of individuals and businesses on cryptoassets.
The second step is legislation.The Digital Asset Basic Act (Basic Act) is currently under review, including provisions on custody mechanisms.Custody and wallet security are very critical aspects.At present, the exchange regulatory framework has been completed. Once these laws are implemented, KRX can officially launch larger-scale tokenization projects.
Malaysia 2026 Outlook: Promote more tokenized products and the entry of large institutions
Guan Hui: Please share your expectations for 2026. What developments do you most hope to accomplish or promote in your home 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 brokerages 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 expect that more large institutions will enter the Malaysian market, and several have already taken the initiative to contact us.In addition, in terms of asset tokenization, we have cooperated with the national sovereign wealth fund Khazanah to promote its bond tokenization project, which is expected to be launched next year.At the same time, some public-private partnership projects are also being negotiated. Although they are still in the dialogue stage, the progress is optimistic.
Guan Hui: You are also the first country in Asia to issue compliance custody licenses, which is very advanced.
Wong: Yes, we have indeed established a regulatory system for digital asset custodians and have currently issued three licenses.At the same time, it is also cooperating with local banks to promote their entry into the custody business field.Overall feedback has been very positive and many banks are already developing plans.We believe that custody services will further support the development of the crypto and tokenization market in Malaysia.
Indonesia 2026 Outlook: Derivatives regulatory reform and accelerated implementation of innovation sandbox
Guan Hui: What are Indonesia’s key plans for next year?What are your new goals in terms of products and services?
Uli: We plan to comprehensively improve the operational level of the exchange in 2026. It is expected that new regulatory requirements will be introduced, focusing on strengthening the exchange’s risk governance and investor protection mechanisms, and improving market stability and sustainable development capabilities.
The regulatory framework for derivatives trading will also be further promoted next year.Currently, this part is originally supervised by commodity trading institutions. We hope to incorporate it into a unified platform and supervision 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 entered the evaluation stage and are expected to be officially launched next year.Including the tokenization of real estate, gold, and government bonds, etc., these are the directions we are focusing on promoting.
Our overall goal is to build the digital economy into an important pillar of the national economy.Therefore, the connection with the traditional financial system will be further strengthened, including key links such as banks, payment gateways, and custodians.At the same time, we also encourage more token issuance (ICO) projects to enter the market.
In terms of basic systems, we will strengthen financial reporting and assessment capabilities.A notice on the accounting treatment of crypto assets has been issued, and it is hoped that it will 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, to establish a more effective regional linkage mechanism and improve the ability to respond quickly to cybersecurity incidents.
