Legal Status Of Cryptocurrencies In Malaysia
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Loading... - Tingtai Tein
- 09 Oct 2024
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Malaysia's stance on cryptocurrencies is complex, with a mix of recognition, regulation, and restrictions. While cryptocurrencies are not considered legal tender, they are classified as securities under the Capital Markets and Services Order, giving them a defined legal status within the country's financial regulatory framework.
The Central Bank of Malaysia Act establishes the ringgit as the sole legal tender, excluding cryptocurrencies from this status. However, there have been calls from within the government to adopt a more progressive stance towards cryptocurrencies, with some suggesting that Malaysia should recognize bitcoin and other cryptocurrencies as legal tender.
The regulatory framework in Malaysia is overseen by Bank Negara Malaysia, the country's central bank, and is governed by several key legislative acts, including the Central Bank of Malaysia Act, the Financial Services Act, and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act.
Cryptocurrency businesses in Malaysia must comply with regulations, including obtaining necessary licenses to operate legally. The Securities Commission Malaysia has classified certain digital currencies and tokens as securities, imposing additional compliance requirements on businesses.
In terms of taxation, active traders operating on digital asset exchanges are required to declare their profits in their annual income tax returns. The government has recently stepped up enforcement of these tax regulations, with a special operation called "Ops Token" launched in June 2024 to address tax revenue leakage from cryptocurrency trading.
Malaysia has also cracked down on illegal bitcoin mining operations, with authorities arresting individuals for stealing electricity to power their mining activities. The country has also destroyed confiscated bitcoin mining rigs in a display of enforcement.
Despite efforts to regulate cryptocurrencies, challenges remain, including the lack of comprehensive legislation specifically tailored to digital assets, uncertainty for businesses and investors, and the absence of clear guidelines for consumer protection in cryptocurrency transactions.
To improve its regulatory landscape, Malaysia could consider developing comprehensive cryptocurrency legislation, implementing stronger consumer protection measures, establishing a licensing framework for cryptocurrency businesses, and enhancing collaboration between regulatory bodies. Balancing innovation with regulatory compliance will be vital for cryptocurrencies in Malaysia.
