The recent revision to the digital asset exchange (DAX) framework announced by the Securities Commission Malaysia (SC) on May 20 is being framed by industry players as a deliberate step towards building a more secure, institution-ready crypto market rather than a reactionary regulatory clampdown.
According to Luno Deputy Country Manager Jeroni Khoo, the updated guidelines were broadly expected after a year-long consultation process and reflect a “progressive approach” to maturing the industry.
He noted that the new requirements, including higher capital thresholds, a 25% shareholders’ fund requirement for operating expenses and an 80:20 cold-to-hot wallet custody ratio, are aimed at strengthening operational resilience and investor protection.
“The annual Proof of Reserve disclosures and wallet audits, now mandated under the framework, were already implemented by Luno in 2024.
“Overall, the revised guidelines not only strengthen investor protection but also enable more innovation through an enhanced internal framework,” Khoo said to BusinessToday.
He added that the changes also position Malaysia’s regulated exchanges to compete more effectively with offshore platforms and attract institutional capital.
Meanwhile, Kinetic DAX Sdn Bhd Chief Executive Officer Chan Wei Chi told BusinessToday that the liberalisation of digital asset listings is expected to improve trading activity on local exchanges by drawing back investors who had previously used offshore platforms.
“The tighter framework also reflects the need for greater market sophistication, given that the global digital asset market exceeds US$2.5 trillion and remains exposed to risks from unregulated operators and cyber threats,” he said.
He highlighted that the strengthened guidelines will help enhance investor protection while supporting the long-term growth of Malaysia’s regulated digital asset ecosystem.
Overall, both industry players view the SC’s overhaul as a dual-track policy — tightening safeguards while simultaneously laying the foundation for deeper liquidity, stronger compliance and increased institutional participation.
The SC has introduced enhanced Guidelines on Recognised Markets, which took effect on May 20, aimed at strengthening oversight of DAX while accelerating the rollout of new products on regulated platforms.
The commission emphasised that the framework is designed to improve competitiveness among licensed operators, enhance investor protection and reinforce the resilience of Malaysia’s digital asset ecosystem amid rising institutional participation.
Under the revised rules, regulated exchanges will benefit from a more streamlined approval process to speed up product launches. In exchange, operators must meet higher standards of accountability, governance and operational resilience, including stricter safeguards for client assets, stronger financial stability requirements, and enhanced oversight of ownership structure and management competency.
