Malaysia Emerges as One of the More Open Islamic Crypto Markets, Fitch Says

Malaysia is emerging as one of the more open Islamic markets for cryptocurrency, supported by regulatory recognition of several digital assets as Sharia-compliant and a licensed domestic trading ecosystem, according to Fitch Ratings.

The assessment, reported by Wu Blockchain citing The Star, comes as Malaysia's regulated digital asset market continues to expand. Fitch said the Securities Commission Malaysia's Shariah Advisory Council classified several major cryptocurrencies as Sharia-compliant between 2020 and the first half of 2026, including Bitcoin, Ethereum, XRP and Stellar.

By the end of the first half of 2026, 10 digital asset players were regulated by the Securities Commission, including exchanges, custodians and initial exchange offering operators.

Malaysia's Regulated Crypto Trading Volume Tops $4 Billion

Trading activity has also increased alongside the development of the regulatory framework. Fitch reported that the total trading value on Malaysia's regulated digital asset exchanges rose 23% year over year in 2025 to more than $4 billion.

Despite that growth, the crypto market remains relatively small compared with Malaysia's broader capital markets. The regulated digital asset trading volume represented roughly 2.5% of the domestic equity market's traded value during the period.

Bank participation remains more limited. Fitch said Malaysian banks have largely restricted their involvement to providing transactional services to registered and licensed digital asset operators rather than developing substantial cryptocurrency trading, brokerage, custody or financing businesses.

Sharia Compliance Remains Divided Across Islamic Markets

Fitch said cryptocurrency offerings within Islamic finance are likely to develop gradually in some jurisdictions, supported by national regulatory strategies and, in certain markets, formal Sharia rulings. Malaysia's approach provides a regulatory structure in which selected digital assets can be assessed through its existing Islamic finance framework.

However, there is no universal consensus on whether cryptocurrencies comply with Sharia principles. Fitch noted that interpretations remain divided among scholars, while the absence of formal guidance from major Islamic finance standard-setting organizations limits harmonization between jurisdictions.

Malaysia's broader financial infrastructure also provides a foundation for digital-asset development. Fitch has highlighted the country's established Islamic capital market and recent adoption of tokenized financial products, including Malaysia's first tokenized sukuk issuance in the first half of 2026.

For the crypto industry, Malaysia's experience illustrates how regulatory clarity and Sharia screening can support digital-asset activity without requiring broad participation from the conventional banking sector. The next phase will depend on whether trading growth is accompanied by deeper institutional participation and broader alignment of Sharia standards across Islamic finance markets.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.