What makes Malaysia the natural choice for leadership in the crypto realm in Southeast Asia?
For a start, the country already has the essential ingredients, namely a robust banking system, mature capital markets, and its position as an emerging digital economy.
Over and above that, regulators Bank Negara Malaysia (BNM) and the Securities Commission (SC) have shown openness to innovation through fintech sandboxes and pilot initiatives.
In contrast Singapore, once the de facto Asean hub for digital assets, is now tightening its approach. It has effectively raised the bar on licensed activity, limiting cross-border crypto services and pressuring firms to either fully comply or exit.
Singapore appears to be taking its foot off the gas.
In June 2025, the Monetary Authority of Singapore (MAS) introduced a new regulatory regime under the Financial Services and Markets Act 2022, requiring Singapore-incorporated crypto firms offering services to overseas clients to either obtain a restricted Digital Token Service Provider (DTSP) licence or halt offshore operations by June 30, 2025.
The licensing bar is intentionally high, and MAS has made clear it will “generally not issue” new DTSP licences.
This policy has led to a visible exodus. Major exchanges like Bybit and Bitget are relocating operations to more permissive markets like Hong Kong and Dubai.
Retail protections have also increased: MAS now bans credit purchases, limits promotions, and enforces investor risk tests and daily reconciliation protocols for licensed providers.
These moves signal a pivot from innovation-first to compliance-first — effectively Singapore easing off the accelerator on crypto liberalisation.
Malaysia’s window of opportunity
While Singapore tightens, Malaysia can move forward with a balanced and credible leadership model, grounded in regulatory clarity, risk mitigation, and innovation.
BNM could lead on stablecoin frameworks and programmable ringgit payment rails, ensuring monetary integrity and financial stability.
The SC can expand licensed frameworks for tokenised securities, digital fund management, and compliant exchanges, complementing existing investor protection measures.
A coordinated roadmap involving BNM, SC, PayNet, ministry of finance, and industry stakeholders could position Malaysia as a compliance-driven but innovation-friendly destination.
What Malaysian leadership could look like
As a national strategy, the government could launch a cross-agency policy agenda, setting clear licensing paths, sandbox objectives, and regional goals, while supporting a regulated ringgit-backed stablecoin for trade, payroll, remittances, and digital infrastructure.
For Islamic-compliant crypto, it could pioneer Shariah-approved tokenisation leveraging on Malaysia’s global Islamic finance leadership.
To unlock new capital flows, Malaysia could tokenise sukuk, palm oil, forestry carbon credits, or tourism bonds.
Under an initiative that can be named “Sandbox 2.0”, the government can build an expanded, transparent sandbox ecosystem focused on anti-money laundering and countering financial terrorism (AML/CFT) efforts as well as investor protection, and real-world integration.
Why Malaysia should act now
With Singapore stepping back, Asean enterprises and global crypto firms are seeking jurisdictions that combine regulatory clarity, credibility, and growth potential.
Thailand, the Philippines, and Vietnam are racing ahead with progressive crypto frameworks; Malaysia can catch up swiftly with aligned policy leadership from BNM and SC.
Delays bring the risk of Malaysia becoming a net consumer of crypto innovation rather than a regional anchor. It will also result in capital flight, brain drain, and missed first-mover advantages.
Time for Malaysia to choose leadership
Malaysia has the building blocks, and with bold, coordinated leadership from BNM and SC, it can rise as Asean’s benchmark for responsible digital asset innovation. Singapore’s retrenchment creates a policy vacuum, a space Malaysia can fill with clarity, compliance, and courage.
The moment to act is now — Prime Minister Anwar Ibrahim appears to be nudging the nation in the right direction, but hopefully we see more in the near future.
The views expressed are those of the writer and do not necessarily reflect those of FMT.
