The Shariah Advisory Council of Malaysia’s securities commission has advised Muslims in Malaysia can trade cryptocurrencies legally in the country. The Malaysian authority that oversees compliance with Islamic law in finance has permitted digital asset trading.
The landmark announcement by Securities Commission Malaysia’s Shariah Advisory Council declared that digital assets’ trading was permissible. The country’s population is about 60% Muslims. Many of them have been reluctant to trade crypto in fear that it might not be Sharia-compliant. Securities Commission chairman Datuk Syed Zaid Albar made the announcement during an online conference Invest Malaysia 2020 on July 7. He stated:
“The SC Shariah Advisory Council has resolved that in principle, it is permissible to invest and trade in digital currencies and tokens on registered digital asset exchanges.”
Supervision of the Cryptocurrency Market
Malaysia has seen exponential growth in people interested in cryptocurrencies. However, there have been internal trading cases, market manipulation, with some exchanges being involved in deceptive practices. These practices led to the need to reposition the existing financial regulatory framework to involve the country’s cryptocurrency market’s supervision. Datuk said the Shariah Council determined that trading and investing in digital currencies are legal in duly registered cryptocurrency exchanges. He added:
“This is a really ground-breaking resolution by SAC (Shariah Advisory Council). It could spur greater development and investment in digital assets.”
Bears Extreme Significance
The commission recently licensed three cryptocurrency exchanges to operate in the country. They include Tokenize, SINEGY, and Luno. The commission has licensed four digital assets in the nation up until this month. The founder of Malaysia’s first crypto exchange SINERGY Kelvyn Chuas hailed the announcement. He called it a big step and bears extreme significance to the Malaysian Muslim community. Chuah stated:
“At the same time, Malaysia is aiming to be the hub of Islamic Finance and FinTech. This announcement does clear the many ambiguities still tied to digital assets […] currently all regulated digital asset trading is permissible while there are several non-compliant activities that will remain disallowed.”
Ensuring Standard Practice
The status of the cryptocurrency industry in Malaysia has been ambiguous. The announcement clears doubts in a country where cryptocurrency trading was not illegal but remained unregulated. The commission announced in February 2019 it was planning to implement new regulations on digital asset trading and ICOs.
The country’s Finance Minister Lim Guna said the new regulations would give exchange operators and coin issuers criteria. He said that would also assist in ensuring standard practice in terms of trading, pricing, and asset protection.