Malaysia’s licensed digital-asset market expanded again in 2025, with trading on regulated exchanges climbing to RM17.14 billion, or just over $4 billion, according to data cited by Fitch Ratings. That was up 23% from RM13.93 billion in 2024, extending a multi-year rise in activity on platforms supervised by the Securities Commission Malaysia.
Fitch said Malaysia stands out among Islamic-finance markets because its regulatory structure and Shariah treatment give digital assets a clearer route into the formal financial system than in some other jurisdictions. Even so, the agency said regulated crypto activity remains small relative to mainstream capital markets and that wider Islamic-crypto adoption is likely to develop gradually rather than uniformly.
Growth in a still-small market
The Securities Commission Malaysia’s 2026 digital-asset market update recorded RM17.14 billion in trading value across regulated digital asset exchanges in 2025, compared with RM13.93 billion a year earlier. Fitch noted that this level was equal to only about 2.5% of trading in Malaysia’s domestic equity market, underscoring that crypto remains a relatively small segment beside traditional securities.
The commission’s 2025 annual report said the increase was supported in part by institutional adoption through exchange-traded funds and clearer regulation in major markets. It also reported that the number of investors active in Malaysia’s regulated digital-asset market rose by about 29% from 2024.
By the end of 2025, the regulator counted 23 digital assets listed on recognized exchanges. It also pointed to participation from established capital-market firms, including stockbrokers offering access to digital-asset futures and fund managers providing exposure through investment strategies.
Licensing and Shariah rules shape the market
Fitch said 10 digital-asset operators held Malaysian regulatory status by the end of the first half of 2026. Malaysia separates regulated activity into three categories: digital asset exchanges, initial exchange offering platforms and digital-asset custodians.
Alongside those licensing rules, Malaysia has built a national Shariah framework for digital assets. The Securities Commission’s Shariah Advisory Council decided in 2020 that regulated digital currencies can qualify as mal, or property, from a Shariah perspective, and that investment and trading in qualifying assets on SC-registered exchanges are permissible if the council’s requirements are met.
Bitcoin, Ether, XRP and Litecoin were among the assets granted Shariah-compliant status in 2020, with Bitcoin Cash added in 2021 and later decisions covering assets including Solana, Cardano, Chainlink, Uniswap, Avalanche, Polkadot and Stellar. The current list identifies Stellar as Shariah-compliant following a December 2024 council meeting. From March 30, 2026, exchanges that want to market other digital currencies as Shariah-compliant must obtain the council’s endorsement under revised Islamic capital-market rules.
Tighter exchange standards and enforcement
In May 2026, the Securities Commission revised its Digital Asset Exchange framework. The updated rules streamlined the process for licensed exchanges to introduce products, while raising requirements around client-asset protection, governance, financial resources, ownership and management standards.
The commission also said Digital Asset Exchange operators are due to become members of Malaysia’s Financial Markets Ombudsman Service during 2026, which would give investors access to a formal dispute-resolution process. At the same time, the regulator reported administrative action against four unregistered exchanges and said it had worked with technology companies, including Google, to restrict promotions by unauthorized operators.
Banks stay cautious as central bank tests tokenized money
Fitch said Malaysian banks remain cautious about direct crypto services, with most participation still limited to services for regulated operators. Across major Islamic-finance markets reviewed by the agency, most Islamic banks have yet to generate material revenue from direct cryptocurrency trading, brokerage, custody or financing. Fitch said broader involvement could create fee income but would also bring operational, liquidity, compliance, reputational and Shariah-compliance risks.
Bank Negara Malaysia is pursuing a separate agenda focused on tokenization and regulated digital money rather than unrestricted crypto activity. In February, the central bank confirmed three initiatives under its Digital Asset Innovation Hub involving ringgit stablecoins and tokenized deposits for wholesale domestic and cross-border payments, including settlement of tokenized assets. Some of those tests will examine Shariah issues.
Bank Negara has said it aims to provide more clarity on ringgit stablecoins and tokenized deposits by the end of 2026 after evaluating the tests. The central bank has also stressed that digital assets are not legal tender in Malaysia, while the division of responsibilities remains unchanged: the Securities Commission oversees issuance, trading and custody in capital markets, and Bank Negara handles payment and monetary matters.
Regional comparison and what comes next
Fitch said Islamic-finance crypto products are likely to keep developing, but not at the same pace across all markets. The agency pointed to differing religious interpretations and the lack of formal cryptocurrency guidance from the Accounting and Auditing Organization for Islamic Financial Institutions and the Islamic Financial Services Board as obstacles to harmonisation.
Against that backdrop, Malaysia’s next confirmed milestones are domestic rather than regional. The Securities Commission is continuing to tighten oversight of exchanges and Shariah labeling, while Bank Negara plans to conclude its testing work and issue further clarity on ringgit stablecoins and tokenized deposits by the end of 2026.
Source: crypto.news