Overview

Evolution of Fixed-Income Securities

With the increasing adoption of Web 3.0 in different industries, we could foresee that Web 3.0 and digital asset trading will be the bellwether in the near future. Currently, there are a few recognised Digital Asset Exchange (DAX) available in Malaysia for digital asset trading. According to one of the DAX operator Luno Malaysia, their user base has increased from 180,000 in Nov 2020 to more than 600,000 at the end of Nov 2021, which shows that Web 3.0 adoption and digital asset users are rising rapidly in Malaysia. On March 2022, the Securities Commission Malaysia (SC) announced that two Initial Exchange Offering (IEO) operators are registered to promote responsible innovation in the digital assets space. This will allow members of the public to invest in digital assets with lower risk.

Although the industry is prepared for Web 3.0, most Malaysians find the entry barrier to be a little too high due to user experience, security, and the investment risk of digital assets. In spite of the number of users who hold digital assets is on the rise in Malaysia, the majority of digital asset users may still be unfamiliar with Web 3.0. Even if Malaysians are prepared for Web 3.0 adoption, these difficulties could still cause them to take unnecessary risks in the unregulated digital asset market.

In the traditional capital market, fixed-income securities have always played an important role in onboarding new investors. This is because fixed-income securities are less volatile, which is why it has become one of the best option for new investors to start their investment journey. But when it comes to digital asset trading, high volatility is the main reason that puts off most new investors, especially those who are still not familiar with digital asset trading.

Therefore, there is a need of fixed-income digital assets in the capital market of Malaysia in order to aid in boosting the ownership of digital assets as well as the uptake of Web 3.0 in Malaysia.