Malaysia’s Crypto Trading Surges 23% as Islamic Finance Opens Up

Malaysia is emerging as one of the more open markets for bringing cryptocurrencies into Islamic finance, with regulated digital asset trading gaining momentum.

Trading volume on Malaysias regulated digital asset exchanges rose 23% year on year in 2025 to more than US$4 billion, or about RM16.2 billion. That figure was equivalent to only around 2.5% of the value traded on the domestic stock market, suggesting that crypto remains an emerging segment rather than a mainstream investment market.

The growth comes as Malaysian regulators continue to develop a framework for digital assets that can operate within Islamic finance principles.

Malaysias Securities Commission (SC) Shariah Advisory Council has issued rulings between 2020 and the first half of 2026 recognising several cryptocurrencies, including Bitcoin, Ethereum, XRP and Stellar, as compliant with Shariah principles.

The development could give Malaysia an advantage as financial institutions and investors explore digital assets that meet Islamic investment requirements. However, the growth of Shariah compliant crypto products is unlikely to be uniform across markets.

By the end of the first half of 2026, Malaysia had 10 digital asset operators under the supervision of the Securities Commission. These include digital asset exchanges, custodians and initial exchange offering operators.

The regulatory structure gives investors a clearer framework for accessing digital assets, while also establishing requirements for companies operating within the sector.

Banks, however, remain relatively cautious. Their current involvement is largely focused on providing services to registered digital asset operators, while direct participation in cryptocurrency markets remains limited.

Malaysia is not the only market seeking to integrate digital assets into its financial system.

The United Arab Emirates has emerged as a major virtual asset centre, with activity in Dubai expanding rapidly. In 2025, institutions regulated by Dubai's Virtual Assets Regulatory Authority recorded almost US$680 billion, or approximately RM2.76 trillion, in transaction value.

Assets under management reached more than US$2.5 billion, equivalent to around RM10.1 billion.

Malaysia's crypto sector may be gaining ground within Islamic finance, but its RM16.2 billion market remains only a fraction of the country's broader financial system. The bigger question is whether regulation and institutional adoption can turn that emerging market into a meaningful part of Malaysia's Islamic financial ecosystem.