Digital asset regulation in Malaysia: is crypto legal?

Is crypto legal in Malaysia?

BNM and the SC regulate specific digital asset business activities, as set out in a joint statement of 6 December 2018. In a joint response in December 2020 they explained the split:

• BNM, as overseer of payment systems, considers privately issued digital assets unsuitable as a general payment instrument because of price volatility and cyber risk. They are not legal tender and not a payment instrument regulated by BNM.
• The SC, as capital market regulator, treats digital assets as an investible asset class and has prescribed them as securities under its laws.

Can Malaysian residents buy digital assets?

BNM's foreign exchange FAQs say a resident is free to buy digital assets on an SC-registered digital asset exchange (DAX) in Malaysia as long as the purchase is settled in ringgit. Transferring digital assets from a registered DAX to an offshore wallet counts towards the foreign currency asset investment limit for residents with domestic ringgit borrowing. BNM advises the public to evaluate the risks carefully.

How does the SC regulate digital assets?

The Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 came into operation on 15 January 2019. Under it, a digital currency is prescribed as securities where:

• it is traded on a facility where offers to buy, sell or exchange it are regularly made or accepted;
• a person expects a return from trading, converting or redeeming it, or from its appreciation in value; and
• it is not issued or guaranteed by a government body or central bank specified by the SC.

When is a digital token a security?

A digital token is prescribed as securities where it represents an interest in an arrangement in which investors pay consideration, their contributions and returns are pooled, returns come from the arrangement's assets or business, investors expect a return, they have no day-to-day control of the business, and the token is not issued or guaranteed by a government body or central bank specified by the SC.

Once prescribed, securities laws apply. The SC has issued the Guidelines on Recognized Markets, which cover exchanges, and the Guidelines on Digital Assets (first issued 28 October 2020, revised 19 August 2024), which cover token offerings, initial exchange offering (IEO) platforms and custodians.

What is a registered digital asset exchange (DAX)?

A DAX is an electronic platform, registered with the SC as a recognised market operator, that facilitates the trading of digital assets. The SC says only registered DAX are allowed to carry out digital asset trading in the Malaysian capital market. A DAX can run an order book, a digital broker model in which it is the counterparty to every trade, or both.

• A digital broker must keep shareholders' funds of at least RM5 million and source digital assets only from regulated providers or those complying with FATF standards.
• Listing a new digital asset needs the operator's own assessment and the SC's concurrence.
• Digital assets must be priced fairly and transparently, with the pricing method disclosed.
• The SC publishes the list of registered operators and the digital assets that can be traded, with their Shariah status.

How do IEO platforms work?

An IEO platform lets businesses raise funds by offering digital tokens. An IEO operator must be registered with the SC, which deems it a recognised market operator, and must have paid-up capital of at least RM5 million. Issuers must be Malaysian-incorporated companies (excluding exempt private and listed companies) or LLPs with their main operations in Malaysia, meet a minimum capital requirement of RM500,000, and raise funds only through an IEO. Investment limits apply:

• Sophisticated investors: no limit.
• Angel investors: up to RM500,000 in a 12-month period.
• Retail investors: up to RM2,000 per issuer and RM20,000 in total in a 12-month period.
• A cooling-off period of at least six business days from the close of the offer.

What does a digital asset custodian do?

Safekeeping, storing, holding or maintaining custody of digital assets for someone else is a capital market service under section 76A of the Capital Markets and Services Act 2007, and custodians are registered by the SC under the Guidelines on Digital Assets. A recognised market operator or registered trustee that wants to offer custody must notify the SC first. A wallet provider is not a custodian where the owner holds the private keys and the provider cannot transfer the assets on its own.

How can you check whether a platform is authorised?

Check the SC's list of regulated digital asset players first. The SC's Investor Alert List names unauthorised entities and individuals, including some that impersonate legitimate firms, and the SC warns that people who invest through unauthorised entities are not protected under Malaysian securities laws. This guide explains the rules and is not investment advice.

Digital assets training from Ogos Learning

Ogos Learning runs digital assets and fintech training for bank and capital market teams, covering how digital assets are regulated in Malaysia. Ogos Learning has trained teams at more than 10 of Malaysia's licensed commercial banks.