- SC Malaysia proposes allowing crypto listings without prior regulatory approval.
- Exchanges must enforce stricter governance and segregate client assets under new rules.
- Public consultation on the proposed crypto reforms runs from June 30 to August 11, 2025.
The Securities Commission Malaysia (SC Malaysia) has proposed changes that would modify the regulatory landscape for cryptocurrency exchanges. The plan permits exchanges to list digital assets without prior approval from the regulator, provided the assets meet minimum qualification standards. The public consultation period for these proposed changes runs from June 30 to August 11, 2025.
The proposed changes aim to enhance market efficiency, increase operator accountability, and expand the range of digital asset offerings. Although they simplify listing procedures, the reforms will introduce stricter governance measures, including the segregation of client assets and better internal controls for exchanges.
New Rules Could Accelerate Asset Listings on Crypto Platforms
Qualified cryptocurrencies won’t need direct approval to be listed under the proposed framework. To qualify, digital assets must meet specific eligibility requirements, such as being actively traded for at least one year on a Financial Action Task Force (FATF)-compliant platform. Additionally, the security audit results for all qualifying assets should be publicly available.
The SC even aims to transfer the responsibility of asset vetting to exchange operators. By placing this duty on platforms, the regulator seeks to expedite the time to market and enhance accountability. This change would enable exchanges to respond more quickly to market demands and better manage their operations with enhanced internal controls.
Furthermore, the regulator is seeking feedback from industry players on whether to allow the listing of riskier assets. These include privacy-focused coins like Monero (XMR), memecoins that ride on internet trends, and emerging utility tokens with low market demand. The SC has expressed concerns about a lack of transparency that could facilitate the misuse of some assets in money laundering or other illicit activities.
Governance, Custody, and Operational Controls Set to Tighten
While asset listing rules may ease, the proposed framework outlines stricter requirements for governance and operational security. Exchanges would also have to separate company money from client funds, which would help reduce the risk of loss or misuse. Furthermore, platforms need to have internal policies that guarantee the security of user funds they receive and provide recovery in the case of insolvency.
SC Malaysia is also suggesting that every crypto exchange have a senior management official based in the country who will be responsible for digital wallet administration. This measure aims to enhance local accountability and increase the transparency of operations involving user assets.
Exchanges that hold customer funds must either register as digital asset custodians or partner with a custodian registered with the SC. This requirement aims to reinforce institutional responsibility and ensure proper safekeeping of client holdings. The regulation of custodians’ universe products adheres to the same regulatory standards, particularly in areas of risk management and fund recovery provisions.
Moreover, the proposed rules would require exchanges to meet new minimum financial thresholds. These include provisions for risk mitigation, fund segregation, and compensation mechanisms, all of which contribute to greater investor protection and market integrity.
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Malaysia Seeks Industry Feedback as Crypto Activity Surges
The SC initiated a public consultation with industry participants and stakeholders to gather their opinions on the proposed reforms. This interaction demonstrates the regulator’s effort to strike a balance between innovation and investor protection. Market participants can provide feedback on the draft framework until August 11, 2025.
The reform follows an increase in cryptocurrency activity in Malaysia. By the end of 2024, the country had achieved an all-time high in trading volume of virtual assets, worth $2.9 billion. With sector growth, the SC aims to modernize regulation to match the new digital finance environment.
