Malaysia Proposes New Crypto Listing Framework to Boost Market Efficiency

Malaysian regulators have proposed a new framework to simplify the listing process of crypto assets, focusing on efficiency and market competitiveness. The proposal alters the landscape for digital asset exchanges by reducing time-to-market for compliant assets, potentially invigorating local crypto activity and attracting institutional interest.

Securities Commission Malaysia (SC Malaysia) is leading this initiative, which will allow digital asset exchanges to list certain cryptocurrencies without prior approval if they meet specified criteria. This move is part of a broader effort to enhance market operations and scale trading activity. "The proposed approach seeks to reduce the time-to-market for new and innovative digital assets deemed to meet the minimum eligibility criteria and risk requirements, while maintaining robust governance standards for DAX operators," noted SC Malaysia.

This proposed change could lead to increased local trading volumes and asset variety. Digital asset exchanges will need to heighten their governance standards, ensuring asset segregation and operational resilience. Malaysian trading values surged to RM13.9 billion in 2024, over double the previous year, indicating rapid market expansion. Such regulatory adjustments may influence other Asia-Pacific regions similarly, where past easing led to increased liquidity and institutional involvement.

Immediate impacts include potential market vibrancy and liquidity enhancement. The proposal creates pathways for listings of governance and DeFi tokens, as well as major cryptocurrencies like BTC and ETH, aligning with investor protection priorities. The reform targets expanding institutional involvement, alongside required operational controls for exchanges. This strategic shift could enhance Malaysia’s standing as a regional crypto hub, promoting both traditional and digital investment.

Evaluating sectoral implications sheds light on potential turnover impacts and regulatory success metrics. As the proposal undergoes public consultation, insights from past regulatory shifts underscore prospects for increased local crypto activity and institutional engagement. The SC is also soliciting industry input on whether certain higher-risk assets, such as privacy coins like Monero (XMR), should be permitted for trading. The regulator is concerned about the lack of transparency in these assets, which could appeal to individuals involved in unlawful activities and increase the risk of money laundering and terrorism financing. Additionally, the SC is seeking comments on assets that follow internet trends or popular culture, commonly known as memecoins, due to their heightened volatility. The regulator is also considering assets with low market demand, such as nascent utility tokens, which are deemed higher risk.

In addition to the proposed changes to the listing process, the SC is also seeking to tighten governance and custody rules for digital exchange operators. Under the new requirements, exchanges would be subject to more stringent rules, including the segregation of user assets. Crypto exchanges would also need to meet new minimum financial criteria, including policies and procedures to mitigate the risk of loss or misuse of user funds and to facilitate repayment in the event of insolvency. Furthermore, exchanges that custody user assets would be required to register as digital asset custodians or engage a custodian registered with the SC to provide its services. This move is aimed at mitigating the risk of loss or misuse of customers’ assets and facilitating the movement of digital assets.

The proposed changes by the SC reflect a broader effort to enhance the regulatory framework for digital asset exchanges in Malaysia. By streamlining the listing process and tightening governance and custody rules, the regulator aims to foster innovation in the crypto industry while ensuring the protection of investors and the integrity of the market. The consultation paper released by the SC seeks to gather public feedback on these proposals, with the aim of implementing the new rules by August 2025. This initiative is part of a broader effort to enhance the regulatory framework for digital asset exchanges in Malaysia, with the goal of fostering innovation in the crypto industry while ensuring the protection of investors and the integrity of the market.