Malaysia
Retail_Trading_Status
- Analysis ID
- #719
- Version
- Latest
- Created
- 2025-12-12 04:45
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- 670b7dfa...
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Executive Summary
Cryptocurrency trading is legal and fully regulated in Malaysia under the oversight of the Securities Commission Malaysia (SC). While digital assets are not recognized as legal tender by the central bank (Bank Negara Malaysia), they are legally classified as securities and can be traded on licensed Digital Asset Exchanges (DAX). Retail investors have access to multiple government-approved platforms, though they must comply with strict KYC/AML requirements.
Key Pillars
Securities Commission Malaysia (SC) as the primary regulator for issuance and trading
Bank Negara Malaysia (BNM) overseeing AML/CFT compliance and payment rails
Recognized Market Operator (RMO) licensing framework for exchanges
Shariah Advisory Council ensuring Shariah-compliant trading options
Inland Revenue Board (LHDN) enforcing tax compliance on active traders
Landmark Laws
Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 (P.U. (A) 12/2019) - Enacted: 2019-01-15
- The foundational order classifying digital currencies and tokens as 'securities' if they are traded on a platform and offer returns, placing them under SC jurisdiction.
- Source
Guidelines on Recognized Markets (SC-GL/6-2015 (Revised 2024/2025)) - Enacted: 2019-01-31
- Establishes the requirements for Digital Asset Exchanges (DAX) to register as Recognized Market Operators (RMO), including capital requirements and operational standards.
- Source
Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) (Amendment) Order 2025 (P.U. (A) 6/2025) - Enacted: 2025-01-09
- Amended the definition of 'digital token' to clarify exclusions for government-issued debentures and refined the scope of prescribed securities.
Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) (Act 613) - Enacted: 2001-01-01
- Applies strict AML/CFT obligations to digital asset exchanges, requiring reporting of suspicious transactions to BNM.
- Source
Considerations
Digital assets are NOT legal tender; merchants are not obliged to accept them.
Capital gains are generally tax-exempt for long-term investors, but frequent trading is taxed as business income.
Strict enforcement against unlicensed foreign exchanges (e.g., past actions against Binance, Huobi).
Shariah-compliant trading is a unique feature of the Malaysian market, with specific whitelisted tokens.
Travel Rule implementation is mandatory for exchanges.
Notes
Malaysia is notable for being one of the few jurisdictions with a clear Shariah-compliant framework for crypto trading. The Securities Commission's Shariah Advisory Council has issued resolutions permitting the trading of digital assets that meet specific requirements, which has encouraged adoption among the Muslim population.
Remaining Uncertainties
- The exact criteria for the proposed 'self-listing' regime for exchanges in 2026 are still under consultation.
- Specifics on how the 2025 Global Minimum Tax (GMT) might impact large corporate crypto holders in Malaysia.
Detailed Explanation
Detailed Explanation
Cryptocurrency trading is legal and fully regulated in Malaysia. The regulatory framework is established under the oversight of the Securities Commission Malaysia (SC), which serves as the primary regulator for the issuance and trading of digital assets. The foundational legal instrument is the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019, enacted on January 15, 2019. This order legally classifies digital currencies and tokens as 'securities' if they are traded on a platform and offer returns, thereby bringing them under the SC's jurisdiction. This classification was later refined by the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) (Amendment) Order 2025, enacted on January 9, 2025, which clarified exclusions for government-issued debentures. The SC governs trading platforms through its Guidelines on Recognized Markets, which require Digital Asset Exchanges (DAX) to register as Recognized Market Operators (RMO) and meet stringent capital and operational standards. Other key regulatory bodies include Bank Negara Malaysia (BNM), which oversees Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) compliance and payment systems under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA). The Inland Revenue Board (LHDN) enforces tax compliance, and the SC's Shariah Advisory Council ensures the availability of Shariah-compliant trading options, a unique feature of the Malaysian market. While the activity is regulated, it is important to note that digital assets are not recognized as legal tender by BNM, meaning merchants are not obliged to accept them. The regulatory environment is strict, with enforcement actions taken against unlicensed foreign exchanges. Retail investors have access to multiple licensed platforms but must comply with strict Know Your Customer (KYC) and AML requirements, including mandatory implementation of the Travel Rule for transaction reporting. For taxation, capital gains are generally exempt for long-term investors, but income from frequent trading is taxed as business income.
Summary Points
I. Regulatory Status
* Cryptocurrency trading is legal and fully regulated.
* Digital assets are not legal tender; merchants are not obliged to accept them.
* Assets are legally classified as securities under SC jurisdiction.
II. Key Regulatory Bodies
* Securities Commission Malaysia (SC): Primary regulator for issuance and trading of digital assets.
* Bank Negara Malaysia (BNM): Oversees AML/CFT compliance and payment rails.
* Inland Revenue Board (LHDN): Enforces tax compliance for active traders.
* Shariah Advisory Council (under SC): Provides guidance for Shariah-compliant trading options.
III. Important Legislation
* Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 (P.U. (A) 12/2019): Enacted 2019-01-15. Foundational order classifying relevant digital currencies and tokens as securities.
* Guidelines on Recognized Markets (SC-GL/6-2015 (Revised 2024/2025)): Enacted 2019-01-31. Establishes the Recognized Market Operator (RMO) licensing framework for Digital Asset Exchanges (DAX).
* Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) (Amendment) Order 2025 (P.U. (A) 6/2025): Enacted 2025-01-09. Amended the definition of 'digital token' to clarify exclusions.
* Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) (Act 613): Enacted 2001-01-01. Imposes AML/CFT obligations on digital asset exchanges.
IV. Compliance Requirements
* Exchanges must obtain an RMO license from the SC.
* Strict KYC/AML requirements are mandatory for all platforms and users.
* Implementation of the Travel Rule is mandatory for exchanges.
* Shariah-compliance is required for specific whitelisted tokens and trading options.
* For taxation, frequent trading is taxed as business income by LHDN, while capital gains for long-term investors are generally exempt.
V. Notable Restrictions or Limitations
* Strict enforcement against unlicensed foreign exchanges (e.g., actions against Binance, Huobi).
* Trading is restricted to platforms and tokens approved by the SC.
VI. Recent Developments or Notes
* Malaysia is notable for being one of the few jurisdictions with a clear Shariah-compliant framework for crypto trading, encouraging adoption among the Muslim population.
* The 2025 amendment order reflects ongoing regulatory refinement of definitions and scope.
Full Analysis Report
Full Analysis Report
In Malaysia, retail cryptocurrency trading is classified as Allowed-Regulated. The regulatory framework is mature and bifurcated: the Securities Commission Malaysia (SC) regulates the issuance and trading of digital assets, treating them as securities, while Bank Negara Malaysia (BNM) oversees the anti-money laundering (AML) aspects and financial system integrity. This dual structure provides legal certainty for retail investors, who are permitted to buy, sell, and hold cryptocurrencies through licensed platforms known as Digital Asset Exchanges (DAX).
The cornerstone of this framework is the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019. This order effectively brought digital currencies under the ambit of the Capital Markets and Services Act 2007 by defining them as securities. Consequently, any entity operating a crypto exchange must register as a Recognized Market Operator (RMO). As of late 2025, several exchanges are fully licensed and operational, including Luno Malaysia, MX Global, SINEGY DAX, and HATA Digital. These platforms offer retail investors a regulated environment with consumer protections, such as segregated client funds and mandatory dispute resolution mechanisms.
Recent regulatory updates have further refined the landscape. The Amendment Order 2025, effective January 2025, clarified the definition of digital tokens, ensuring that government-issued instruments and certain traditional securities are distinct from digital assets. Furthermore, the SC has moved towards a more liberalized listing framework, proposing in late 2025 to allow licensed exchanges to independently list tokens starting in 2026, provided they meet specific due diligence criteria. This marks a shift from the previous regime where the SC had to explicitly approve every token listed on a DAX.
Taxation and enforcement remain active areas. The Inland Revenue Board (LHDN) does not impose a capital gains tax on casual investors holding crypto for the long term. However, active traders and miners are subject to income tax, as demonstrated by 'Ops Token' in 2024, a joint operation between the LHDN and police to crackdown on tax evasion in the crypto sector. Additionally, the SC maintains a strict 'Investor Alert List' and has taken enforcement actions against unauthorized foreign exchanges, blocking their websites and warning the public to use only locally licensed platforms.
In Malaysia, retail cryptocurrency trading is classified as **Allowed-Regulated**. The regulatory framework is mature and bifurcated: the Securities Commission Malaysia (SC) regulates the issuance and trading of digital assets, treating them as securities, while Bank Negara Malaysia (BNM) oversees the anti-money laundering (AML) aspects and financial system integrity. This dual structure provides legal certainty for retail investors, who are permitted to buy, sell, and hold cryptocurrencies through licensed platforms known as Digital Asset Exchanges (DAX). The cornerstone of this framework is the *Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019*. This order effectively brought digital currencies under the ambit of the Capital Markets and Services Act 2007 by defining them as securities. Consequently, any entity operating a crypto exchange must register as a Recognized Market Operator (RMO). As of late 2025, several exchanges are fully licensed and operational, including Luno Malaysia, MX Global, SINEGY DAX, and HATA Digital. These platforms offer retail investors a regulated environment with consumer protections, such as segregated client funds and mandatory dispute resolution mechanisms. Recent regulatory updates have further refined the landscape. The *Amendment Order 2025*, effective January 2025, clarified the definition of digital tokens, ensuring that government-issued instruments and certain traditional securities are distinct from digital assets. Furthermore, the SC has moved towards a more liberalized listing framework, proposing in late 2025 to allow licensed exchanges to independently list tokens starting in 2026, provided they meet specific due diligence criteria. This marks a shift from the previous regime where the SC had to explicitly approve every token listed on a DAX. Taxation and enforcement remain active areas. The Inland Revenue Board (LHDN) does not impose a capital gains tax on casual investors holding crypto for the long term. However, active traders and miners are subject to income tax, as demonstrated by 'Ops Token' in 2024, a joint operation between the LHDN and police to crackdown on tax evasion in the crypto sector. Additionally, the SC maintains a strict 'Investor Alert List' and has taken enforcement actions against unauthorized foreign exchanges, blocking their websites and warning the public to use only locally licensed platforms.
Source Evidence
Primary and secondary sources cited in this analysis
"Entities which have not been approved by the SC... are required to cease all activities immediately."
"Digital currency and digital token are prescribed to be securities for the purposes of the securities laws."
"Digital assets are not recognised as legal tender in Malaysia."
"The SC regulates Digital Assets in Malaysia through the Capital Markets & Services Order 2019."
"The SC proposes removing its direct concurrence for certain digital assets listings on DAXs."
"Capital gains or earnings obtained through crypto investments are not subject to taxation."
Web Sources (3)
Sources discovered via web search grounding
Search queries used (5)
- Malaysia crypto tax guidelines 2025
- Malaysia cryptocurrency regulation retail trading status 2025
- Bank Negara Malaysia stance on cryptocurrency 2024
- Securities Commission Malaysia Digital Asset Exchange list 2024 2025
- Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 summary
https://fintechnews.my/53901/blockchain/malaysia-crypto-tax/
https://financefeeds.com/malaysia-to-allow-crypto-exchanges-to-independently-list-tokens-from-2026/
https://www.binance.com/en/square/post/27856376136130