Malaysia's Crypto Regulations Evolve with 2025 Amendments

In Malaysia, the legal status of cryptocurrency is clear: while buying and owning crypto is permitted, it is not recognized as legal tender by the federal government. Instead, cryptocurrency is classified as a security under the Prescription Order 2019. This regulatory framework is actively being developed by the Securities Commission Malaysia (SC), which is currently engaged in public consultations regarding tokenized capital market products.

Significant changes to crypto regulations in Malaysia are expected in 2025. On January 9, 2025, the Prescription Securities and Digital Currency and Digital Token Order 2019 was amended, revising the definition of digital tokens and classifying digital assets as securities. This amendment empowers the SC to regulate the offerings and trading of these assets. Additionally, the Personal Data Protection Act, effective from July 31, 2024, imposes data handling requirements on crypto businesses, while the Tax Enforcement (Ops Token) in June 2024 aims to crack down on undeclared crypto income.

The Malaysian government is considering new regulations for cryptocurrencies and blockchain technology to align with global trends. The SC is focusing on regulating cryptocurrencies as securities, overseeing digital assets trade and issuance, and regulating digital assets exchanges and Initial Exchange Offering (IEO) platforms. The crypto incident framework in Malaysia emphasizes technical adherence and transparency, with strict penalties for non-compliance, including fees, blocked access, and license revocation.

There are several types of crypto licenses in Malaysia. The Issuer license is for the issuance and offerings of tokens with a minimum of 500 thousand MYR, applicable for startups and fintech projects. The IEO Operator license serves as an organization for initial public offerings with 5 million MYR, required for platforms attracting investments. The Digital Asset Custodian (DAC) license is for the storage of digital assets with 500 thousand MYR fees, applicable to custodian services and fintech vaults.

In terms of taxation, capital gains from personal crypto investments are not taxable, and occasional investors are eligible for this tax-free regime. Tax-free events include occasional selling, swapping, sending crypto between personal wallets, gifting, donating crypto, airdrops, and using crypto for selling goods. However, crypto trading as a business with high frequency is taxable as regular income tax, ranging from 0-30% depending on income brackets. Trading, mining, and receiving crypto as compensation for services are also taxable. The tax return deadline for individuals is April 30, while for business income, it is June 30 each year.

Crypto adoption in Malaysia is on the rise. The current crypto user penetration rate is projected to be 12.77%, expected to increase to 13.03% by 2026. By next year, approximately 4.74 million Malaysians will use cryptocurrencies. The revenue of the cryptocurrency market is expected to reach US$ 484.1 million in 2025, growing at a rate of 3.74% annually. With the increasing number of users, the revenue market of crypto will reach US$ 502.2 million in 2026. The Malaysian government’s crypto holdings are not publicly disclosed, but it monitors cryptocurrencies and other digital assets within the financial system.

Malaysia is recognized as one of the crypto-friendly countries in the world due to its legal regulatory framework that facilitates cryptocurrency activities. Despite not having separate laws for crypto tax, the country maintains strict regulations to prevent fraud and risk in the crypto landscape. The SC is the main government body responsible for regulating digital asset operations, including trading, issuance, and safekeeping. Bank Negara Malaysia (BNM) also monitors systemic risks.