1. Is cryptocurrency accepted as legal tender in Malaysia?1. Is cryptocurrency accepted as legal tender in Malaysia?
'Legal tender' may appear to be a vague term, but it simply refers to a legally recognised payment method. Notes and coins issued by the Central Bank of Malaysia (more commonly known as Bank Negara Malaysia, or BNM) are legal tenders in Malaysia, according to Section 24 of the Central Bank Act 1958.
Despite the fact that they are called "coins," cryptocurrency is not legal tender in Malaysia. For the avoidance of doubt, BNM announced in January 2014 that Bitcoin is not legal tender due to its volatility. In fact, with the exception of El Salvador, cryptocurrency has yet to be recognized as legal tender anywhere in the world.
However, as implied by our discussion of the first issue, cryptocurrency can be used in barter or trade. In Malaysia, there are no laws prohibiting the exchange of services or assets for cryptocurrency. However, in order for this to work, both the giver and the receiver of the cryptocurrency must agree to the transaction. Unlike legal tender, we have the option of accepting or refusing cryptocurrency as payment for our services.
In January 2018, a businessman in Sabah used Bitcoin to secure a land deal. However, Proton Holdings suspended a Proton dealer the same year because he advertised accepting Bitcoin as payment.
2. Is cryptocurrency useful or valuable in Malaysia?2. Is cryptocurrency useful or valuable in Malaysia?
In Malaysia, cryptocurrency payment gateways such as Coinbase Commerce, Bitpay, and Cryptobilis already accept cryptocurrencies as payment. In Kuala Lumpur, there are also bitcoin ATMs. It is obvious that cryptocurrency has value in the eyes of a growing population, but does it have legal value?
Section 73 provides context:
"73. Liability of person to whom money is paid or a thing is delivered by mistake or coercion."
A person who has received money or something delivered by mistake or coercion must repay or return it."
3. Is it possible to tax cryptocurrency?3. Is it possible to tax cryptocurrency?
Yes. In Malaysia, cryptocurrency can be taxed under Section 3 of the Income Tax Act 1967.
However, because the Act does not provide specific details, there is no proper framework for cryptocurrency taxes. At the moment, the tax regulator takes a case-by-case approach to each situation.
4. Who is in charge of cryptocurrency regulation in Malaysia?4. Who is in charge of cryptocurrency regulation in Malaysia?
One might expect BNM to be in charge of overseeing something called a "currency." That, however, is not the case. The Securities Commission Malaysia is the cryptocurrency authority in Malaysia.
This is because the Securities Commission is tasked with regulating and developing the Malaysian capital market. The Securities Commission, established under the Securities Commission Act 1993, is a powerful statutory body with the authority to create and enforce rules and regulations governing the Malaysian capital market.
This is why the Securities Commission regulates cryptocurrency, and why, if you want to learn more about cryptocurrencies, the Securities Commission is the best place to start.
5. Is it legal in Malaysia to trade cryptocurrency?5. Is it legal in Malaysia to trade cryptocurrency?
However, it is best to only trade on exchanges that are registered with the Securities and Exchange Commission.
You can only run an exchange if you are a Securities Commission-registered digital asset exchange (DAX) operator. Otherwise, operating a DAX is a violation of securities laws. If convicted, a person may face a fine of up to RM10 million or a term of imprisonment of up to 10 years, or both.
The Securities Commission requires registered DAX operators to follow strict regulations, which ensure proper safeguards to protect investors' interests and reduce risks related to cyber-security, money laundering, and terrorism financing.