Malaysia is planning an overhaul of its regulatory framework for digital asset exchanges, aiming to expedite token listings and enhance investor safeguards.
On Monday, Malaysia’s Securities Commission has released a consultation paper proposing significant updates to its regulations for digital asset exchanges (DAX).
Key changes include permitting certain digital assets to be listed on DAX platforms without the SC’s prior approval, provided they satisfy set eligibility criteria. The regulator also plans stricter governance and operational requirements for exchange operators, such as mandatory segregation of client assets and higher financial thresholds.
The SC is collecting public feedback on the proposals from stakeholders across the industry, including issuers, exchanges, financial institutions, and legal professionals. The consultation period will run from June 30 to August 11.
The proposed reforms build on the SC’s earlier efforts to tighten oversight of the digital asset industry and ensure market integrity. They follow a series of enforcement actions against unlicensed crypto exchanges operating in Malaysia without the regulator’s Recognised Market Operator (RMO) status, as required under the Capital Markets and Services Act 2007.
In December last year, the SC took action against Bybit and its chief executive, ordering them to cease all operations and marketing in Malaysia for running an unlicensed digital asset platform. In 2023, the SC ordered Huobi Global to cease operations in Malaysia for failing to register as an RMO.
The proposed DAX reforms also come at a time of significant growth in Malaysia’s digital asset sector since the introduction of the DAX framework in 2019. In 2024, trading volumes soared to a record RM13.9 billion ($2.9 billion), more than doubling compared to the previous year. According to the SC, there has been increased participation from institutional investors and traditional capital market intermediaries, both through direct investments and fund-based exposure.
