Crypto Crossroads: Unraveling Regulatory Futures in South Korea, Malaysia, and Indonesia

This content is based on the panel discussion “Asia’s Crypto Frontier: Balancing Regulation and Compliant Growth”at the Finternet 2025 Asia Digital Finance Summit. The session was moderated by Angelina Kwan, Managing Director of Stratford Finance, and featured speakers Wong Huei Ching, Executive Director of Digital Strategy and Innovation at the Securities Commission Malaysia; Uli Agustina, Director of Digital Financial Assets and Crypto Assets Supervision at Otoritas Jasa Keuangan (Indonesia Financial Services Authority); and Harry Kim, Chief Business Officer at Kintsugi Technologies.

The Finternet 2025 summit took place on 4 November in Hong Kong under the theme “Connecting Dreams × Building the Future,” supported by more than ten institutions including OSL Group, Invest HK, the Financial Services Development Council and Hong Kong Cyberport.

The audio transcription is done by GPT and may contain errors. To view the full recording on YouTube:

Asia Leads in Regulation, Driving Orderly Crypto Market Growth

Angelina Kwan: I just got back from Korea Blockchain Week, and the energy there was incredible. During the event, the Korean Stock Exchange was under heavy pressure to launch ETPs — everyone was saying, “Hong Kong is already ahead,”which definitely added to their stress. Now with Korea’s new president, the Digital Asset Basic Act (DABA) has been pushed forward rapidly, and we’re starting to see a clearer regulatory structure take shape. Harry, can you share some updates on Korea’s regulatory developments, and how Hong Kong might be able to participate?

Harry Kim: Korea has a very active crypto retail market, and our new president has made digital assets a key pillar of the country’s broader digital finance innovation agenda. We’re also moving to legally redefine the term — from “virtual assets”to “digital assets” — to provide greater regulatory clarity and structure.

The regulatory approach is now entering a second phase. Beyond exchanges, it will soon cover custodians, stablecoins, advisors, marketers, and other stakeholders in the ecosystem. Although these rules haven’t officially passed yet, the direction is clear: Korea is aiming to establish a more detailed, all-encompassing framework to protect users and promote healthy market development.

In Korea, passing or amending a law typically takes time: about one year for review, followed by another year of pilot testing, before full implementation. So, we’re realistically looking at a one- to two-year timeline.

Angelina Kwan: That also means Hong Kong still has time to stay ahead — great news for us. For those in Hong Kong thinking of expanding into Korea, now could be a strategic moment.

That said, I think Korea still has some infrastructure gaps to fill. Hong Kong already has licensed exchanges capable of supporting the unbundling of financial products and the listing of ETPs, which puts us significantly ahead. If Korea wants to launch ETPs now, they still need to build out the necessary supporting infrastructure.

When we were in Korea, a few of us discussed this and agreed: KRX is likely to launch ETPs within a year. I believe Korean regulators are going to move fast this time — we can’t afford to slow down either.

Malaysia’s Crypto Regulatory Evolution Since 2019

Angelina Kwan: Dr. Wong, could you walk us through some of the latest developments in Malaysia’s crypto regulatory approach?

Wong Huei Ching: Sure. Malaysia brought digital assets under our securities regulatory framework as early as 2019. Over the past five to six years, we’ve gained solid insights into the registered exchanges operating under this structure, and our confidence in the ecosystem has grown. This year, we conducted a checkpoint review and concluded that digital assets are increasingly becoming a part of investors ’ portfolios. At the same time, demand is rising for more sophisticated crypto products.

Based on that, we’ve decided to update our regulatory guidelines, which are set to be released early next year. One major shift is that exchanges will be granted more autonomy — we’re moving away from the “nanny-style”supervision model. Exchanges will be allowed to list tokens based on their own internal governance processes.

Of course, this also comes with greater accountability. We’re expecting exchanges to raise the bar on investor protection — things like wallet custody arrangements and capital adequacy will be critical. The broader goal is to institutionalize the market and encourage more large-scale, professional players to enter, helping to boost crypto’s credibility within the traditional banking system.

To that end, we’ve also held joint sessions with our central bank, bringing compliance teams from both traditional finance and the crypto space together for open dialogue. The goal is to close the gaps in trust and understanding between the two sectors.

As of now, Malaysia’s crypto ecosystem includes 21 licensed players offering everything from crypto funds and derivatives to trading platforms, with brokerage services coming soon. We’ve also allowed local brokers to tap into global liquidity pools to provide more competitive pricing for their clients.

Another major focus is tokenization. We’re looking to bring the efficiency and innovation from the crypto space into the traditional capital markets. We’ve consulted with the industry and are finalizing guidelines that will clearly define the roles and responsibilities of issuers and intermediaries handling tokenized capital market products. Just a year ago, interest in this topic was minimal. But now, the response has been overwhelming — our central bank has even released a discussion paper, signaling strong institutional support.

To further enable this, we’ve introduced sandbox mechanisms that support end-to-end pilots — from asset tokenization through to payment and settlement — aimed at fostering meaningful innovation.

Angelina Kwan: This might not fall squarely under your purview, but can you speak to Bank Negara’s position on stablecoins? They’re a hot topic right now, especially in the context of tokenization where stablecoins are often used for payments. Is there a framework in development? And what about unlicensed stablecoins already circulating in the market — do they pose more of a risk or an opportunity?

Wong Huei Ching: We’ve had extensive discussions on stablecoins, both among regulators and with Bank Negara. To be fair, the central bank is quite supportive — especially when it comes to stablecoins backed by the Malaysian ringgit (MYR).

A few months ago, they launched a sandbox and invited participants to test real-world use cases for MYR-backed stablecoins. I’ve been actively encouraging players in both the capital and crypto markets to take part in this initiative.

Our view is: if we can successfully prove market demand for a MYR stablecoin, it’ll pave the way for broader discussions on foreign currency stablecoins. Ultimately, it all comes down to one question — can you prove real utility?

Indonesia’s Regulatory Overhaul: Crypto Oversight Moves to OJK

Angelina Kwan: Indonesia’s digital asset market has seen rapid growth and a vibrant ecosystem. Can you share what’s driving this expansion, and what key regulatory strategies you’re using to support compliant development in the industry?

Uli Agustina: Much of the progress comes from strong government support. As part of Indonesia’s recent financial stability reforms, crypto assets have been formally classified as financial assets. We’re also in the midst of a major transition — moving oversight of crypto exchanges and the broader ecosystem from the Ministry of Trade to OJK, Indonesia’s Financial Services Authority. This shift brings crypto under the same regulatory umbrella as other financial services.

Our focus is on creating a stable, compliant environment, with strong risk governance and consumer protection. Indonesia’s setup is uniquely local — we have an oversight board, a transaction classification system, and a dedicated clearinghouse that handles settlement for crypto transactions.

We’re also bridging the gap between traditional banking and the crypto space — for instance, all crypto transactions must be routed through banks. On top of that, we’ve established a national custodian that requires at least 70% of user assets to be held in custody there to ensure asset security. Not all platforms are compliant yet, but we’re working to bring them up to standard to build user trust.

We’re issuing new regulatory frameworks to shift the perception of crypto from being purely speculative to a meaningful part of the national digital economy. One example in our regulatory sandbox is a blockchain-based dairy farming project in Java. It tracks livestock production to help previously unbanked farmers build credit profiles, enabling them to access financing. This connects directly to the banking system and transforms their financial inclusion.

We’re also testing tokenization use cases in real estate, gaming, and intellectual property. These innovations are expected to go live soon. As regulators, we take a strict approach to licensing, focusing on strong capital foundations and governance. We want these platforms to evolve beyond spot and secondary markets and eventually serve as underwriters for ICOs or IPOs.

Angelina Kwan: What kind of challenges have you faced regulating this sector, and how are you addressing them?

Uli Agustina: We’ve definitely faced challenges — especially in cybersecurity. There have been serious incidents that exposed weaknesses in infrastructure. That’s why OJK is working closely with other agencies — we’re not going it alone. We’ve invested in education and capacity building, including a partnership with the University of Indonesia to train a new generation of blockchain engineers and developers.

On the policy side, we’ve embedded cybersecurity into the regulatory framework, including clear incident response protocols. We work hand-in-hand with Bank Indonesia, especially since transactions involve both banks and payment gateways. We conduct joint audits and assessments to ensure there are no security loopholes. And if something does go wrong, we have a rapid response system in place to contain and resolve the issue efficiently.

Perpetual Futures and ETPs: Regulated Exchanges Move In

Angelina Kwan: We’re seeing a clear trend — traditional financial institutions are aggressively moving into crypto. At a recent conference, a licensed exchange in Southeast Asia announced plans to launch perpetual futures (Perps) — digital asset futures contracts traded on a regulated platform.

It’s not just regulators pushing forward — traditional exchanges are now jumping in. For example, Korea Exchange (KRX) recently held a five- to six-hour forum focused entirely on launching exchange-traded products (ETPs) for crypto. This shows how regulatory and institutional forces are converging to bring greater structure and compliance to the digital asset market.

Harry, Korea has a strong portfolio of cultural assets — like BlackPink and other K-pop groups. Now KRX wants to tokenize cultural IP. What’s your take on this trend? Are there similar tokenization efforts in Indonesia or Malaysia?

Harry Kim: Yes, Korea is moving toward opening the tokenization market, but we’re still missing critical legal infrastructure. The biggest gap is taxation — there’s no clear framework for how to tax crypto transactions or asset management. Without tax clarity, it’s hard for companies to operate with confidence.

Angelina: Hong Kong doesn’t tax crypto.

Harry: Unfortunately, Korea is planning to implement taxes soon — likely between 20% and 25%, possibly starting next year. That’s going to be the first major step: giving clarity on how individuals and companies should be taxed on digital assets.

The second step is legislation. The Digital Asset Basic Act is currently under review, and it includes regulations on custody. Custody and wallet security are essential parts of the infrastructure. The regulatory framework for exchanges is largely complete. Once these laws are finalized, KRX will be able to fully launch large-scale tokenization initiatives.

Malaysia’s 2026 Outlook: More Tokenized Products and Institutional Players

Angelina Kwan: What are your expectations for 2026? What key developments do you hope to achieve in your market?

Wong Huei Ching: In the short to medium term, we expect to see more product launches — not just tokens listed on exchanges. We’ve received strong interest from traditional financial institutions, including brokers and fund managers, who are preparing to offer tokenized or crypto-linked products. That’s something we’re really looking forward to next year.

We also anticipate that more large-scale institutions will enter the Malaysian market — some are already in talks with us. On the tokenization front, we’ve been working with our sovereign wealth fund, Khazanah, on tokenizing their bonds, which is expected to go live next year. We’re also in early-stage discussions on several public-private partnership projects — things are progressing positively.

Angelina: Malaysia was the first in Asia to issue licenses for regulated digital asset custodians, which puts you ahead.

Wong: Yes, we’ve established a regulatory regime for digital asset custodians and have issued three licenses so far. We’re also working with local banks to encourage them to enter the custody space. The response has been very positive — many banks are already planning their entry. We expect digital asset custody to become a key enabler for the growth of both crypto and tokenized markets in Malaysia.

Indonesia’s 2026 Outlook: Derivatives Reform and Accelerated Sandbox Innovation

Angelina Kwan: What are Indonesia’s key plans for next year? Any new goals in terms of products or services?

Uli Agustina: In 2026, we aim to significantly enhance the operational performance of crypto exchanges. We plan to introduce new regulatory requirements focused on strengthening risk governance and investor protection, with the goal of ensuring market stability and long-term sustainability.

We’ll also expand our regulatory framework to cover derivatives trading. Previously, this was under the oversight of the commodities authority, but we’re now working to integrate it into the same regulatory structure as crypto assets, creating a unified approach.

On the innovation front, we’re accelerating our regulatory sandbox efforts. Several projects are already under assessment and expected to launch next year, including tokenization of real estate, gold, and government securities — these are key areas of focus.

Our broader ambition is to make digital assets a backbone of the national economy. That includes deepening integration with traditional financial infrastructure — banks, payment gateways, and custodians. We’re also encouraging more ICOs and token issuance activities in the market.

We’re working on improving our financial reporting and evaluation standards. A bulletin has already been issued under Indonesia’s accounting principles for crypto asset treatment, and our goal is to gradually align with global accounting standards.

Lastly, we’re stepping up efforts on anti-money laundering (AML) by enhancing regional cooperation. This includes preventing regulatory arbitrage, especially in cross-border cases like wallet theft or fund outflows. We’re aiming to establish a faster, coordinated response framework to handle cybersecurity incidents across jurisdictions.

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