Malaysia has been experiencing strong and steady economic growth even since achieving independence in the late 50’s. Since the 70’s, the Malaysian economy has been diversifying from reliance on agricultural and mineral exports to include international trade, tourism, and manufacturing (particularly of electronics) as major national industries. Malaysia is also known as a hub for Islamic banking.
As Bitcoin is widely considered to be Sharia-compliant and as the Malaysian financial authorities have resolved to tolerate Bitcoin and cryptocurrency activity, there’s no reason why Bitcoin can’t accelerate this Southeast Asian nation’s already-rapid development. Malaysia’s highly-educated and relatively wealthy citizens have shown great interest in blockchain technology. Numerous crypto companies have sprung up in Malaysia as a result. Even some Malaysian banks are getting onboard!
If you live in Malaysia and want to become a (greater) part of the revolution in financial technology which is Bitcoin, read on. Our guide will inform you as to the current situation regarding the taxation and legislation of Bitcoin in your country. We’ll also cover how you can easily and quickly purchase Bitcoin for Ringgit, using any credit or debit card issued by either MasterCard or VISA.
Bitcoin’s Legal Status in Malaysia
Bitcoin is not recognised as legal tender in Malaysia. This does not mean that Bitcoin is illegal however! “Legal tender” is a technical term, referring to forms of money recognized by law as valid for payment purposes. So, while merchants or service providers cannot legally refuse Ringgit as payment, they’re under no obligation to accept Bitcoin. Bitcoin therefore has the same status in Malaysia as gold; it’s known to be valuable but only certain people will trade for it. Furthermore, no regulatory protections exist for either asset.
Malaysia’s central bank, Bank Negara Malaysia (BNM), has no intention to ban cryptocurrency trading, according to statements made in January of 2018 by Johari Ghani, Second Finance Minister. Johari stressed the need for the BNM to adopt an approach balanced between protecting citizens and the financial system, and encouraging innovation in the fintech sector. The BNM has therefore imposed regulations on Malaysian crypto exchanges, primarily aimed at preventing money laundering and terrorist financing.
After consideration of Bitcoin and other cryptos, the BNM laid out its full policy approach to creating its own digital currency in a document released in September 2017, entitled Central Bank Digital Currency: A Monetary Policy Perspective.
Bitcoin is Considered Halaal under Sharia Law
In April of 2018, Muhammad Abu-Bakar of the Indonesian firm, Blossom Finance, submitted his considered opinion that Bitcoin is acceptable as money under Sharia Law. Many Muslims around the world consider this sufficient to begin investing in Bitcoin with a clear conscience. Note that not all cryptocurrencies are covered by this declaration, as some contain aspects of lending at interest.
A Malaysian government advisory committee, Majlis Perundingan Melayu, is working with a South Korean blockchain development company to develop a Sharia-compliant blockchain technology from the ground up. As with similar projects, it may be used for such purposes as tracking the halaal status of foods.
Bitcoin Taxation in Malaysia
According to an article published by The Edge Financial Daily in January of 2018, cryptocurrency transactions are currently tax-free in Malaysia under existing income tax and capital gains tax laws. Tax law applicable to Bitcoin and cryptocurrency has yet to be passed by the government. Until such time, it would appear that Bitcoin remains in a “grey area.”
We at Coinmama would advise our clients to accurately record all their Bitcoin and crypto transactions, for purposes of proper tax reporting. Indeed, following an investigation into a local exchange in early 2018, the Inland Revenue Board (IRB) stated that “…all traders should adhere to the Malaysian tax requirement by keeping proper records for audit purposes and disclose any transactions from the crypto currency trading when requested by IRB.”
We assume that the Malaysian regulators are developing appropriate taxation laws for Bitcoin, so recommend that our clients take it upon themselves to stay informed on such matters.
One of the most inspiring Malaysian blockchain projects involves 9 banks and the BNM, designed to improve banking services by integrating new technology. This speech by the Deputy Governor of the BNM, Jessica Chew Cheng Lian, describes the project in depth. It is not yet known which banks in particular are involved or exactly what the project hopes, but it’s clearly an ambitious collaboration.
How to Buy Bitcoin in Malaysia
Interested in becoming a part of the evolution of money? Coinmama enables Malaysians to buy bitcoin (BTC) with a credit or debit card issued by either MasterCard or Visa. Here’s how to achieve this in a few short steps:
Step 1 – Create Your Coinmama Account:
- Head to the Coinmama website and select the blue “Sign Up” tab.
- You’ll need to enter your email, password, first name, last name and your country of residence (Malaysia is selectable).
- If you already have an account, just sign in with your login details.
- For more information on how to create an account with us, click here.
Step 2 – Verify Your Account:
- To purchase bitcoin (BTC), you first need to be verified by us, in compliance with BNM regulations.
- It’s necessary to upload your ID or passport, plus various other documents depending on which level of verification you wish to reach.
- For further help with account verification, please click here.
Step 3 – Purchase Your Bitcoin:
- Once signed in and verified, navigate to the “Bitcoin” tab in the top menu bar.
- Once there, you will be presented with several choices: either purchase a set amount of BTC ,or enter in a custom amount of up to roughly $5,000 (as of the time of writing).
- Supply your Bitcoin wallet address; this is where we’ll send the bitcoins which you purchase.
- Next, select the “Proceed to checkout” button.
Step 4 – the Checkout Page:
- Complete the form with your relevant details. Make sure that your card details, such as your address, correspond with the details you supplied when creating your Coinmama account.
- Finally, proceed to payment by clicking on the “Pay now” button. Note that only VISA or MasterCard are accepted.
Once your payment has been made, the order status will read “In Process.” This means that your order is being processed by the card company. After a few moments, the order will be processed and the payment will be approved.
Your wallet then needs to be confirmed. In approximately 10 minutes, you will receive payment to bitcoin at the address you supplied. After a further 10 minutes or so, this transaction should appear as confirmed within your wallet. Note that during times of especially high traffic, your transaction may take slightly longer to confirm.
Malaysia is keeping pace with the development of Bitcoin and blockchain technology. Regulators are clearly well-informed on the topic and seeking to prevent negative outcomes without stifling positive developments. This bodes well for further crypto adoption and innovation in Malaysia!