Stablecoin issuer / redeemer in Malaysia
Issues a fiat-pegged stablecoin to the public, operates redemption, and holds reserves backing the float.
Stablecoin issuer is conditionally permitted in Malaysia with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- CDD/EDD under AMLATFPUAA 2001 and BNM's AML/CFT TFS for FIs Policy Document — identify & verify individual customers (name, address, DOB, nationality, ID), legal entities (certificate of incorporation, directors, shareholders, UBO), partnerships/trusts (partners, trustees, settlors, beneficiaries)
- Beneficial ownership identification — look through layers to identify natural persons who ultimately own/control the customer
- Purpose and intended nature of business relationship — understand and document the customer's rationale for using the VASP's services
- Source of funds/wealth verification for higher-risk customers or transactions
- Ongoing transaction monitoring — continuously monitor business relationship and transactions for consistency with customer risk profile
- Non-face-to-face (NFF) CDD measures — multi-factor authentication, video verification, cross-referencing with independent sources
- PEP EDD — senior management approval to establish/continue relationship, source of wealth and funds verification
- Suspicious Transaction Reports (STRs) to BNM's Financial Intelligence Unit (FIU)
- Record-keeping obligations under AMLATFPUAA 2001
Key Restrictions
- Must obtain an e-money issuer license from Bank Negara Malaysia (BNM) under the Payment Systems Act 2003 if the stablecoin is classified as e-money (functioning as a widely accepted medium of exchange, stores value, used for payment)
- If the stablecoin is classified as a security/digital token under CMSA (representing interest in a company, debt, asset, or investment product), issuance requires SC approval with prospectus requirements and capital market rules
- Minimum capital funds of RM 5 million for non-bank e-money issuers
- Funds received for e-money issuance must be segregated from issuer's own funds and placed in trust accounts with licensed financial institutions
- E-money stablecoins must be fully backed and redeemable at par value
- Only 5 DAX operators registered; SC is strict and slow on registrations (6-12 months) — relevant if stablecoin is traded on or listed on a DAX
- IEO framework requires separate SC approval
Key Risks
- Regulatory classification ambiguity — a stablecoin could be deemed e-money (BNM-regulated) or a security token (SC-regulated), or both, creating overlapping or uncertain regulatory obligations
- BNM has not explicitly issued stablecoin-specific regulations; existing e-money rules are applied by analogy, creating interpretive risk
- SC has issued cease-and-desist orders against unregistered operators (e.g. Binance 2021) — enforcement risk is real and active
- No capital gains tax advantage for individuals may not apply to stablecoin trading if deemed 'business income' by IRB
- Foreign-issued stablecoins (e.g. USDC, USDT) face uncertainty on whether they are permitted for use locally without a local issuer license
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
As E-Money/Payment Token (Regulated by Bank Negara Malaysia - BNM):
Criteria: If a stablecoin functions as a widely accepted medium of exchange, stores value, and is used for payment purposes, it is likely to be classified as e-money under the Payment Systems Act 2003 (PSA) and the Financial Services Act 2013 (FSA).
Key Consideration: BNM's Guidelines on E-Money (BNM/RH/GL 002-7) define e-money as monetary value represented by a claim on the issuer, stored electronically, issued on receipt of funds, and accepted as a means of payment by persons other than the issuer.
Payment Systems Act 2003: https://www.bnm.gov.my/documents/20124/960537/Payment+Systems+Act+2003.pdf
Financial Services Act 2013: https://www.bnm.gov.my/documents/20124/960537/Financial+Services+Act+2013.pdf
Guidelines on E-Money (updated 2021): https://www.bnm.gov.my/documents/20124/938096/Guidelines+on+E-Money.pdf
As Securities/Digital Token (Regulated by Securities Commission Malaysia - SC):
Criteria: If a stablecoin is structured to represent an interest in a company, debt, or an asset, or is offered as an investment product where buyers expect a return, it may be classified as a security token or digital token under the Capital Markets and Services Act 2007 (CMSA).
Capital Markets and Services Act 2007: https://www.sc.com.my/api/documentms/download.ashx?id=e74c7e3f-671c-4235-8663-e387c932a39a
Guidelines on Digital Assets (Revised 2020): https://www.sc.com.my/api/documentms/download.ashx?id=80a0669e-d716-43b8-80f2-e6e23259e8f0
Framework for Digital Assets: https://www.sc.com.my/regulation/guidance/guidance-note-on-digital-assets
For E-Money Stablecoins (BNM):
Segregation of Funds: Funds received for the issuance of e-money must be safeguarded and clearly separated from the issuer's own funds.
Placement in Trust Accounts: These funds typically need to be placed in trust accounts with licensed financial institutions, ensuring their availability for redemption.
Capital Adequacy: E-money issuers must meet minimum capital funds requirements, usually RM 5 million (for non-bank entities).
These measures ensure that the value of e-money (and thus a stablecoin classified as e-money) is fully backed and can be redeemed at par value.
Any entity wishing to issue a stablecoin classified as e-money must obtain an e-money issuer license from Bank Negara Malaysia under the PSA. This process involves thorough due diligence, assessment of financial soundness, risk management capabilities, and compliance with all relevant guidelines.
Issuance: If a stablecoin is deemed a security, its issuance would fall under the CMSA. This may require SC approval for public offers, or adherence to specific exemptions.
SC Malaysia — Digital asset exchange registration, IEO oversight, cease-and-desist enforcement
Capital Markets and Services (Prescription of Securities) Order 2019 (2019) — Digital currency and digital token as prescribed securities
Guidelines on Digital Assets (2020) — DAX operator requirements
VASP: Recognized Market Operator (RMO) — DAX registration with SC. Only 5 operators registered (Luno, Tokenize, MX Global, Sinegy, Hata). SC strict and slow on registrations. 6-12 months.
EXCHANGE: DAX registration with SC — MYR 5M (~$1.1M USD) minimum shareholders' funds. SC issued cease-and-desist orders against unregistered operators (incl. Binance 2021). IEO framework requires separate SC approval.
Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA 2001)
AML/CFT and Targeted Financial Sanctions for Financial Institutions (AML/CFT TFS for FIs) Policy Document (BNM Policy Document): Issued by Bank Negara Malaysia, this comprehensive policy document provides detailed guidance and requirements for reporting institutions to comply with AMLATFPUAA 2001. This document has specific sections/appendices applicable to "Digital Currencies" or "Virtual Assets."
Capital Markets and Services Act 2007 (CMSA): For digital assets that are deemed "securities," the Securities Commission Malaysia (SC) regulates entities like Digital Asset Exchanges (DAX) under this Act and its accompanying guidelines. These entities are also subject to specific AML/CFT requirements imposed by the SC.
Guidelines on Recognised Markets (SC Guidelines): Specifically for operators of recognised markets, including DAX, detailing operational, conduct, and AML/CFT requirements.
Customer Identification and Verification:
Beneficial Ownership: Identify and verify the ultimate beneficial owner (UBO) for all corporate and legal arrangements. This involves looking through layers of ownership to identify the natural person(s) who ultimately own or control the customer, or on whose behalf a transaction is being conducted.
Purpose and Intended Nature of Business Relationship: Understand the rationale behind the customer's request to use the VASP's services and the anticipated level and type of activity.
Source of Funds/Wealth: For higher-risk customers or transactions, obtain information on the source of funds or source of wealth.
Ongoing Monitoring: Continuously monitor the business relationship and transactions to ensure consistency with the VASP's knowledge of the customer, their business, risk profile, and source of funds. Update customer information regularly.
Non-Face-to-Face (NFF) Customers: Given the online nature of many VASPs, robust measures for NFF CDD are crucial, including multi-factor authentication, video verification, and cross-referencing with reliable independent sources.
Politically Exposed Persons (PEPs): Implement Enhanced Due Diligence (EDD) measures for PEPs, their family members, and close associates, including obtaining senior management approval to establish or continue the relationship and taking reasonable measures to establish the source of wealth and funds.
Evidence fact my.tax not found (may have been renamed).
Business Income (Taxable): If an individual or company engages in systematic, repetitive, and organized trading activities with the intention of profit, it will likely be treated as a "business" under Section 4(a) of the ITA 1967.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- medium
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — a stablecoin issuer may operate in Malaysia only by obtaining an e-money issuer license from BNM (if the stablecoin is classified as e-money) with RM 5M minimum capital, segregated trust accounts, and full par-value redemption rights, or alternatively complying with SC securities rules if the token is deemed a security; foreign-issued stablecoins face regulatory uncertainty.
Questions this verdict aims to answer
- What e-money or banking license is required to issue?
- What reserve composition, segregation, and audit rules apply?
- What redemption rights must be granted to holders?
- Are foreign-issued stablecoins permitted for use locally?