Malaysia is gearing up for a major update to how it regulates digital asset exchanges (DAX), with plans to make it easier to list tokens while introducing tighter safeguards to protect investors.
On Monday, Malaysia’s Securities Commission (SC) released a consultation paper outlining its proposed changes. One of the most significant shifts would allow certain digital assets to be listed on licensed exchanges without needing prior approval from the regulator as long as those assets meet specific eligibility requirements.
The SC also wants to impose stricter rules on how exchanges operate. New proposals include mandatory segregation of client assets to prevent misuse of customer funds, as well as higher financial requirements for platform operators to ensure stability and trustworthiness.
The regulator is actively seeking input from a broad range of stakeholders, including crypto issuers, exchange operators, financial institutions, and legal experts. The public consultation will run from June 30 to August 11.
These planned reforms build on the SC’s ongoing efforts to strengthen oversight of the fast-growing digital asset industry and uphold market integrity. They come after several crackdowns on unlicensed crypto exchanges operating without proper registration under Malaysia’s Capital Markets and Services Act 2007.
Last December, for example, the SC ordered Bybit and its CEO to halt all operations and marketing activities in Malaysia for running an unlicensed platform. In 2023, Huobi Global also faced enforcement action for failing to register as a Recognised Market Operator (RMO).
The push for new regulations arrives at a time of rapid growth in Malaysia’s digital asset sector. Since the country first introduced its DAX regulatory framework in 2019, the market has expanded significantly. In 2024 alone, trading volumes surged to a record RM13.9 billion (around $2.9 billion), more than doubling from the previous year.
The SC noted that this boom is being fueled not only by retail investors but also by increased participation from institutional players and traditional capital market firms, who are gaining exposure to digital assets either directly or through investment funds.
With these reforms, Malaysia hopes to strike a balance between fostering innovation in the digital asset space and maintaining strong protections for investors a goal that regulators worldwide are grappling with as crypto adoption continues to grow.
