Malaysia Proposes Major Changes to Digital Asset Exchange Regulations Amid 115% Trading Volume Surge

Malaysia’s Securities Commission (SC) has proposed sweeping changes to its digital asset exchange (DAX) regulatory framework. This move follows a significant increase in digital asset trading, which reached a record RM13.9 billion ($2.9 billion) in 2024, more than doubling the volume from 2023. The proposed updates aim to reduce the time-to-market for new tokens while enhancing governance, investor protection, and platform resilience.

The surge in trading volume in 2024 was driven by growing interest from both retail investors and institutional participants. Traditional capital market intermediaries are also increasingly involved, gaining exposure to crypto assets through direct investment and fund-based channels. The SC’s consultation paper, released on June 30, 2025, outlines these proposed reforms, which are open for public consultation until August 11, 2025.

One of the key proposals is to allow certain tokens to be listed on regulated DAX platforms without prior approval from the SC, provided they meet predefined eligibility standards. This change aims to cut down regulatory delays and enable exchanges to respond more quickly to market demand. However, DAX operators would bear greater responsibility for ensuring that listed assets comply with legal and risk requirements.

Enhanced governance obligations are also part of the proposal. DAX operators would be required to segregate client assets from their own operational funds, preventing misuse and bolstering trust among users. Operational control standards would be upgraded to reflect the unique risks of trading digital assets, including more stringent oversight of internal processes and improved risk management systems.

Another significant aspect of the proposal is the raising of financial thresholds for licensed DAX operators. The SC believes that stronger capital requirements will help ensure that platforms can withstand market shocks and fulfill obligations to clients, thereby boosting investor confidence and contributing to a more stable trading environment.

These proposed changes are part of the SC’s broader strategy to keep Malaysia’s digital asset ecosystem competitive and secure. The consultation comes amid wider government efforts to position Malaysia at the forefront of responsible fintech innovation. In March 2025, Bank Negara Malaysia (BNM) announced plans to explore asset tokenization and digital asset technologies, focusing on collaboration with the private sector and use cases such as tokenized deposits and CBDCs, as outlined in its 2022-2026 financial sector blueprint.

Despite its progressive stance, the central bank has cautioned that cryptocurrencies are still not legal tender due to their risks. This cautious approach was echoed in the SC’s recent enforcement actions, which targeted unlicensed foreign crypto exchanges for operating without registration. The surge in crypto scams and theft has also highlighted the need for continuous regulation. Tenaga Nasional Berhad (TNB) reported a 300% rise in power theft linked to illegal crypto mining, with the number of cases surging from 610 in 2018 to 2,397 in 2024. This underscores the importance of regulatory oversight in the digital asset space.