The Malaysia Digital Asset Exchange License represents a key regulatory framework overseen by the Securities Commission Malaysia (SC) since 2019. This license ensures that all cryptocurrency-related operations occur within a systematic and compliant environment, aligning digital asset exchanges with national financial laws and regulations.
Operating a licensed exchange in Malaysia offers numerous advantages, from a supportive regulatory climate to significant market potential. For entrepreneurs and businesses looking to enter the digital asset space, understanding the licensing process, requirements, and benefits is essential.
Advantages of the Malaysia Digital Asset Exchange License
Supportive Regulatory Framework
Malaysia has established itself as a forward-thinking jurisdiction in the digital asset sector. The Securities Commission Malaysia actively promotes blockchain technology and fintech innovation, creating a business-friendly environment that encourages growth while maintaining clear regulatory guidelines.
Streamlined Compliance
Compared to many other countries, Malaysia offers relatively straightforward compliance requirements for digital asset exchanges. This allows businesses to focus on innovation and expansion without being overwhelmed by regulatory complexity, though all core legal and operational standards must still be met.
Tax Benefits
One of the most appealing aspects for businesses and investors is that Malaysia does not impose capital gains tax on profits from the sale of digital assets. This can significantly enhance profitability for both exchange operators and their users.
Growing Market Potential
Interest in cryptocurrencies and digital assets is rapidly expanding in Malaysia. Recent reports indicate a surge in local investment activity, providing licensed exchanges with access to a dynamic and growing customer base. The ability to offer a diverse range of SC-approved digital assets further enhances market appeal and liquidity.
Increased Trust and Credibility
Being licensed by the SC signals a high level of operational integrity and compliance. This strengthens customer confidence, as users know the exchange adheres to strict anti-money laundering (AML) and counter-financing of terrorism (CFT) standards. It also demonstrates a commitment to safeguarding user assets and data.
Fundraising Opportunities
Licensed exchanges can facilitate Initial Exchange Offerings (IEOs), offering startups and projects a regulated platform to raise capital through digital token sales. This creates new avenues for innovation and economic growth within the local digital asset ecosystem.
Regulatory Authority: Securities Commission Malaysia
The Securities Commission Malaysia (SC) is the primary regulatory body responsible for overseeing the Digital Asset Exchange license. Operating under the Guidelines on Recognized Markets, the SC ensures that all exchanges function within a secure, fair, and transparent framework.
Key responsibilities of the SC include:
- Licensing and Approval: Reviewing and authorizing qualified applicants to operate as digital asset exchanges.
- Regulatory Oversight: Monitoring exchange activities to ensure market integrity and investor protection.
- Compliance Checks: Enforcing AML/CFT regulations and other operational guidelines.
- Market Development: Promoting innovation and growth within Malaysia’s digital asset sector.
Types of Digital Asset Licenses in Malaysia
Recognized Market Operator for Digital Asset Exchanges (RMO-DAX)
This license permits the operation of a digital asset trading platform. Operators can choose between an order book model, which matches buy and sell orders, or a broker model, where the platform acts as an intermediary.
Digital Asset Custodian (DAC)
A DAC license allows a business to provide secure storage and management services for digital assets on behalf of clients, protecting them from theft, loss, or mismanagement.
Initial Exchange Offering (IEO) Operator
IEO operators can host token sales for businesses seeking to raise capital, providing a structured and secure fundraising mechanism.
Permitted Activities Under the License
Licensed digital asset exchanges in Malaysia may engage in the following activities:
- Trading of Approved Digital Assets: Facilitating the buying and selling of cryptocurrencies approved by the SC, such as Bitcoin and Ethereum.
- Order Matching and Brokerage: Operating either an order book system or offering brokerage services.
- Custodial Services: Safeguarding digital assets using advanced security measures like encryption and secure storage.
- Initial Exchange Offerings (IEOs): Hosting fundraising events where businesses issue digital tokens to investors.
Timeline for License Acquisition
The process of obtaining a Malaysia Digital Asset Exchange License typically takes between 6 to 7 months. This includes:
- Company registration: 1 week
- License application review and approval: 5–6 months
- Corporate bank account opening: 4 weeks
👉 Explore the licensing process in detail
Step-by-Step Licensing Process
Step 1: Company Registration
The first step involves registering a local company with the Suruhanjaya Syarikat Malaysia (SSM). This establishes the legal entity required for the license application.
Step 2: Meet Company Requirements
Applicants must fulfill several prerequisites, including appointing:
- 1 local director
- 2 shareholders (any nationality)
- A local registered office address (virtual offices are not permitted)
Step 3: Capital Requirements
A minimum paid-up capital of RM 5,000,000 (approximately USD 1,050,000) must be secured and maintained.
Step 4: Fit and Proper Assessment
Key personnel, such as CEOs, CFOs, and COOs, must undergo a background check to ensure they meet the SC’s integrity and suitability standards.
Step 5: Internal Controls
Robust internal policies must be established, including AML/CFT procedures, risk management frameworks, and audit mechanisms compliant with Financial Action Task Force (FATF) guidelines.
Step 6: Monitoring Systems
Advanced transaction and market surveillance systems should be implemented to detect and prevent suspicious activities.
Step 7: Application Submission
All required documents, including the business plan, policies, and system descriptions, must be submitted to the SC for review.
Step 8: License Approval
The SC evaluates the application and may request additional information. If all requirements are met, the license is granted.
Step 9: Post-Licensing Compliance
Ongoing compliance, including regular reporting and adherence to SC guidelines, is mandatory for all licensed exchanges.
Step 10: Bank Account Opening
A corporate bank account must be opened to manage financial transactions, a process that usually takes about four weeks.
Required Documents
- Company registration certificate and constitution
- Notarized ID copies of directors and shareholders
- Background details of key management personnel
- Detailed business plan and financial projections
- AML/CFT policies and risk management frameworks
- Transaction monitoring system descriptions
- Liquidity maintenance plan
- List of digital assets to be traded (must be SC-approved)
Key License Requirements
- Minimum paid-up capital: RM 5,000,000
- Physical operational office in Malaysia (furnished)
- 1 compliance officer (any nationality)
- 1 local director
- 1 local employee on payroll
Cost Considerations
The total cost of obtaining a Digital Asset Exchange License in Malaysia varies based on business scope and service requirements. Most consultancies offer all-inclusive packages covering company registration, licensing, and compliance setup. A detailed fee breakdown is usually provided during the initial consultation phase.
Frequently Asked Questions
What is the Malaysia Digital Asset Exchange License?
It is a regulatory license issued by the Securities Commission Malaysia that allows businesses to operate digital asset exchanges legally. It ensures compliance with financial regulations and provides a secure environment for cryptocurrency trading.
How long does it take to get licensed?
The entire process, from company registration to license approval, typically takes 6–7 months. This includes a 5–6 month review period by the SC.
What are the capital requirements?
A minimum paid-up capital of RM 5,000,000 (approx. USD 1,050,000) is required. The SC may adjust this based on the scale and complexity of the business.
Can foreign nationals own or direct the exchange?
Yes, foreign shareholders are permitted. However, at least one director must be a Malaysian resident.
What activities can a licensed exchange perform?
Licensed exchanges can facilitate trading of approved digital assets, offer custodial services, and host Initial Exchange Offerings (IEOs).
Is corporate banking support included?
Most service providers assist with corporate bank account opening after the license is approved, a process that usually takes around four weeks.
👉 Learn more about compliance requirements
Entering Malaysia’s digital asset market with a properly licensed exchange can provide significant opportunities for growth and innovation. With clear regulations, tax benefits, and a supportive regulatory environment, Malaysia is an attractive destination for blockchain businesses.