Malaysia’s secondary market is likely to adopt blockchain technology within two years to offer an alternative digital platform for market players, including those who plan to go for an initial public offering (IPO) to trade in an entirely new market.
Neuroware.io Co-founder/ Chief Technology Officer, Ruben Tan, said with the implementation of blockchain, a digital infrastructure which was deemed as the “internet of trust”, it would enable more different asset classes to be traded on it.
“It would be a secondary market that is accessible for more different asset classes, especially those are not traditionally tradable, or traditionally required a lot of regulations to be traded,” he told Bernama, recently.
For example, Tan said, if one planned to begin business in the future, instead of going through the fund-raising channels offered by the current six equity crowdfunding (ECF) operators in the country, with blockchain, one could sell one’s private equity of private company to retail investors without taking the leap to become a public company or go for an IPO.
“It could serve as an alternative way for a company to raise fund,” he said.
However, Tan disclosed that currently, the unregulated Initial Coin Offering (ICO) has emerged as a loophole for many companies to go for an IPO without going through the required process.
“But I believe the loophole will not be opened for too long, as I expect there will be a more formal approach introduced by the regulators to address the issue,” he said.
He revealed that a growing number of regulators and companies from various sectors – utilities, supply chain and start-ups involving segments like insurance and financial technology (fintech) – had approached Neuroware since 2015 to set up their blockchain laboratories as well as research and development (R&D) centres.
“In terms of R&D, they are trying to figure out the business use cases and prove that they work.
“We also have been working with the regulators beginning this year to build a proof of concept (POC), despite more efforts now are put in to educate the companies,” he said.
Tan expressed relief that the awareness among the local market players had been improving despite they were slightly lagging behind their regional peers, especially from Singapore, China, Japan and South Korea.
“We have organised a series of training workshops last year and early this year, but starting from the middle of the year, more firms have re-approached us to build POC prototypes for them.
“That means they have figured out their use cases or the purposes of using blockchain,” he said.
Commenting on the efforts by the regulators, Tan said, he was surprised they had been working hard to have a better understanding on the technology.
“They are not moving backwards or remain conservative over this technology at all, they are hungry for new things, which we feel very fortunate about,” he said.
To encourage the adoption of blockchain, Tan said, the regulators should firstly, get over their “paranoia” and have a better understanding of the technology,
“It is also necessary for them to cultivate and encourage the adoption of the technology by issuing mandate or sandbox guideline to the relevant departments to work together and offer services on a blockchain- based system,” he said.