Chapter 1: Regulatory Framework & Legal Basis
1.1 Why the SC, not the central bank
Many assume “trading crypto = a payments/tech business.” In Malaysia that is wrong.
In 2019 the Ministry of Finance issued the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019, which classifies qualifying digital currencies and digital tokens as “securities.”
Consequences:
- Running a platform where users buy and sell these assets = operating a securities market.
- Operating a securities market requires recognition by the SC (Securities Commission).
- You therefore need Recognized Market Operator (RMO) status, in the Digital Asset Exchange (DAX) category.
1.2 Core laws & guidelines
Treat this as your required “reading list” — master each before applying:
| Document | Purpose |
|---|---|
| Capital Markets and Services Act 2007 (CMSA) | Parent act; overall securities-market framework |
| Digital Currency and Digital Token Order 2019 | Classifies digital assets as securities |
| Guidelines on Recognized Markets | Core! Its DAX chapter sets operator registration conditions and duties |
| Guidelines on Digital Assets | Rules for issuance (IEO) and custody (DAC) |
| Guidelines on Prevention of Money Laundering and Terrorism Financing | The SC’s AML/CFT requirements |
| Guidelines on Technology Risk Management | Technology risk and cybersecurity |
| AMLA 2001 | AML parent act; a DAX is a “reporting institution” |
📌 The SC revises these periodically (“Revised” versions). Always download the latest from the SC site — never a third-party reposted older copy.
1.3 Three easily-confused licence categories
There are three SC-regulated roles in Malaysia’s digital asset ecosystem — don’t mix them up:
Digital Asset Exchange
= what you want] SC --> IEO[IEO Operator
Initial Exchange Offering
= fundraising/token issuance] SC --> DAC[Digital Asset Custodian] DAX -.may need to add.-> DAC
- DAX: an exchange that matches users buying/selling digital assets — the subject of this guide.
- IEO Operator: lets blockchain projects raise funds / issue tokens to the public via a platform (a regulated ICO analog).
- DAC (Digital Asset Custodian): dedicated custody. A DAX that self-custodies client assets must meet custody requirements, or partner with a licensed DAC.
1.4 “Tradable digital assets” are not your call
Even with DAX status, you cannot list assets freely. Every asset must be assessed against SC criteria (not fraudulent, reasonable liquidity, technically compliant, etc.). Currently tradable assets are relatively concentrated (BTC, ETH and other majors). See Chapter 7: Listing.
Summary / action items
- Download and read the SC Guidelines on Recognized Markets (DAX chapter).
- Confirm your model is a DAX (matched trading), not IEO or pure custody.
- Record the version number and effective date of each guideline.
- List the assets you plan to launch and check them against SC listing criteria.
➡️ Next: Licensing & Capital