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Malaysia has become one of the most open Islamic markets for cryptocurrencies, according to Fitch Ratings, with regulators allowing several major digital assets to be classified as Sharia-compliant. Between 2020 and 1H26, the Securities Commission Malaysia's Shariah Advisory Council endorsed BTC, ETH, XRP and XLM among compliant assets, and 10 licensed digital asset entities now operate under its regime by mid-2026.
Why it matters
Clear regulation paired with Sharia-compliant classification is pulling Malaysia's Muslim-majority retail base into regulated channels rather than offshore venues. In 2025, trading volumes on regulated local exchanges grew 23% year-on-year to surpass $4 billion, a scale that now represents roughly 2.5% of the domestic equity market.
For the broader Islamic finance world, Malaysia's framework offers a template: explicit fatwa-style asset classifications plus licensing appear to be converting religious-compliance uncertainty into measurable, onshore volume.
Market impact
Fitch notes banking support remains largely confined to transactional services for licensed operators, meaning deeper integration with the conventional financial system is still a step away. That gap is the key watch item: if lenders extend beyond transactional services, regulated volume growth could compound further.
For BTC and ETH, formal Sharia endorsement in a major Islamic market adds a new institutional-adjacent demand pool, and other Muslim-majority jurisdictions are likely to face pressure to clarify their own classifications.
Source: [Malaysia among more open Islamic markets for crypto, Fitch says — The Star](https://www.thestar.com.my/business/business-news/2026/09/16/malaysia-among-more-open-islamic-markets-for-crypto-fitch-says)
Frequently asked questions
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Which crypto assets are Sharia-compliant in Malaysia?
The Securities Commission Malaysia's Shariah Advisory Council endorsed BTC, ETH, XRP and XLM among major crypto assets as Sharia-compliant between 2020 and 1H26.
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How large is Malaysia's regulated crypto market?
In 2025, trading volumes on regulated local exchanges grew 23% year-on-year to surpass $4 billion, representing roughly 2.5% of the domestic equity market.
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How many licensed digital asset operators does Malaysia have?
By mid-2026, 10 licensed digital asset entities were operating under the Securities Commission Malaysia's regulatory regime.
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Why does Fitch consider Malaysia an open Islamic crypto market?
Fitch cites clear regulations and formal Sharia-compliant classifications for major crypto assets, which allow Muslim investors to trade through licensed local channels.
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Do Malaysian banks support crypto businesses?
Banking support remains largely confined to transactional services for licensed operators, with deeper integration into the conventional financial system still limited.
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