Malaysia's Evolving Legal Framework for Cryptocurrency Regulation

Cryptocurrency in Malaysia occupies a unique legal position: while not recognized as legal tender, it is not illegal and is regulated under specific financial laws. Bank Negara Malaysia (BNM), the country's central bank, maintains that digital currencies like Bitcoin and Ethereum are not considered legal tender and are unsuitable for general payment instruments due to their price volatility and vulnerability to cyber threats.

Despite this, the Securities Commission Malaysia (SC) has taken proactive steps to regulate digital assets. Under the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019, digital assets are classified as securities, bringing them under the purview of the SC. This classification allows for the regulation of digital asset exchanges, initial exchange offerings, and custody services, ensuring that these activities are conducted within a legal framework.

Privately-issued digital assets such as cryptocurrencies are not suitable as a general payment instrument as they do not exhibit the universal characteristics of money and face some limitations, including price volatility and vulnerability to cyber threats (1).

The SC's regulatory approach aims to facilitate responsible innovation while managing emerging risks associated with digital assets. By providing clear guidelines and working collaboratively with BNM, the SC seeks to position Malaysia as a key player in the global digital finance landscape. This includes nurturing the digital asset ecosystem and ensuring investor protection through comprehensive regulatory measures.

Source:
(1) Securities Commission Malaysia – Digital Assets
(2) BNM and SC’s Joint Response on Policy Confusion Over Cryptocurrencies

Last updated: 08-05-2025 Disclaimer: This article does not provide legal advice. If you need legal advice, please contact an attorney directly.