Malaysia’s Communications Ministry Says Cryptocurrencies Should Be Adopted as Legal Tender

Malaysia’s deputy minister of the Communications and Multimedia Ministry proposed in parliament that cryptocurrencies should be legalised.
Vadim Artyukhin on Unsplash

Quick take:

  • Active users of cryptocurrency in Malaysia are on NFT platforms.
  • The Communications and Multimedia Ministry is looking into ways to increase involvement in cryptocurrency among Malaysia’s youth.
  • Malaysia’s central bank is mulling over whether to introduce a central bank digital currency.

Malaysia’s deputy minister of the Communications and Multimedia Ministry said on Monday that the country should adopt cryptocurrencies as legal tender. 

This was said in response to a supplementary question from a member of the opposition party about the government’s stand on NFT trading.

“We hope the government will allow and legalise this so that we can increase the youth’s uptake of cryptocurrencies,” Datuk Zahidi Zainul Abidin added.

He explained that active users of cryptocurrency in Malaysia are mainly from the younger generation, especially on NFT trading platforms. He went on to say that cryptocurrency is the future of finance and therefore the Ministry is looking into how it can increase involvement in cryptocurrency among Malaysian youth. 

Malaysia’s Ministry of Communications and Multimedia is responsible for broadcasting, personal data protection, broadband and mobile service, among a list of other media-related tasks. While the ministry proposed the legalisation of crypto, it did not specify whether it will be involved in digital assets.

“All of these are under the purview of Bank Negara Malaysia and the Securities Commission,” said Datuk Zahidi Zainul Abidin.

He also said that the central bank and securities regulator falls under the jurisdiction of the Ministry of Finance. However, the Ministry of Housing and Local Government also has authority over “digital financial activities”.

Malaysia’s central bank has yet to officially announce its stance on adopting cryptocurrency as legal tender, but it told Bloomberg News in January that it is mulling over whether to introduce a central bank digital currency (CBDC).

According to Bloomberg, Malaysia teamed up with the Bank for International Settlements, Australia, Singapore and South Africa to test the use of CBDCs for international settlements as part of a project called Project Dunbar.

Elsewhere in Asia, the Bank of Korea has been experimenting with using its CBDC to purchase NFTs.

So far, El Salvador is the first and only country to have adopted Bitcoin as legal tender. It began buying Bitcoin last year when it was trading at $50,000. It has bought at least 1,801 coins in total, 400 of which were bought in January for $15 million amid a market “dip”. 

Last year, El Salvador requested a $1.3 billion  International Monetary Fund (IMF) loan which has yet to be approved. 

On Jan 25, Al Jazeera reported that the IMF has urged El Salvador to strip Bitcoin of its status as legal tender, citing risks to financial stability and consumer protection that would be an obstacle for the country to get a loan.

With El Salvador as an example, it might also prove difficult for Malaysia to get a loan from IMF in the future if it adopts cryptocurrency as legal tender.

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