Cryptocurrencies and digital assets in Malaysia: legal and shariah challenges

• Main Authors: Zul Kepli, Mohd Yazid, Ahmad Bustami, Tajul Aris
• Format: Conference or Workshop Item
• Language: English
• Published: Fakulti Undang-undang UKM 2021
• Subjects: K Law (General)
• Online Access: http://irep.iium.edu.my/98092/1/98092_Cryptocurrencies%20and%20digital%20assets%20in%20Malaysia%20legal.pdf; http://irep.iium.edu.my/98092/
• Institution: Universiti Islam Antarabangsa Malaysia

Cryptocurrencies and digital assets are becoming more popular in Malaysia after the issuance of clear guidelines by the Securities Commission in 2020. Licensed cryptocurrency exchanger, Luno Malaysia alone saw a total transaction of US$300 million on its digital platform in the year 2020, and the total transactions by July 2021 have almost reached US$1 billion. This study started with an analysis of the definition and scope of cryptocurrencies and digital assets, followed by an examination of the legal and regulatory framework in Malaysia. This study also explored the views of Islamic finance experts and Shariah scholars on cryptocurrencies and digital assets. The focus includes the identification of shariah issues related to cryptocurrencies and digital assets in Malaysia; whether cryptocurrencies are money or digital assets, shariah legitimacy: conflicting views and finality of rulings, problems with identification and division during divorce, ‘terrorism’ financing problems, and zakat payment issues. The result suggested that while the finality of shariah rulings by the Shariah Advisory Council of Bank Negara Malaysia and the Shariah Advisory Council of Securities Commission is an essential factor in Malaysian Muslims’ adoption of cryptocurrency and digital assets, a more proactive action must be taken by industry players and a better legal framework must be put in place.