Malaysia Could Adopt Cryptocurrencies as Legal Tender

A senior Malaysian government official claimed the government should allow crypto to be used as a currency of exchange.
The central bank, which is considering issuing a central bank digital currency (CBDC), has not yet commented on these statements.

During an appearance in Congress on Monday, Deputy Minister of the Ministry of Communications and Multimedia, Zahidi Zainul Abidin, went on record to say that Malaysia should adopt Bitcoin (BTC) and other cryptocurrencies as legal tender.

"We hope the government can allow this," Abidin said in response to a question from an opposition lawmaker.

Although the use of BTC globally as a store of value and payment instrument has grown, the same has not happened with the adoption of crypto as legal tender. So far only El Salvador has committed to doing so, drawing strong criticism from the International Monetary Fund (IMF) for its associated risks.

The viability of Salvadoran President Nayib Bukele’s project remains in question. Since its adoption in September, when Bitcoin was declared legal tender, only 14% of businessmen have permitted transactions in BTC, according to a survey of companies carried out by the ‘Chamber of Commerce’ of El Salvador.

According to the recently published study, Salvadoran companies were not attracted to the use of cryptocurrency.

During his speech, Minister Zahidi did not specify the extent of his ministry’s involvement regarding digital assets. The ‘Malaysian Ministry of Communications and Multimedia’ is responsible for overseeing the digital press and broadcasting sectors.

It also coordinates and supervises telecommunications companies, as well as the operations of 5G mobile networks in the country, and even the management of national and foreign investments in its technology industry.

Central Bank Studies the Launch of the Virtual Malaysian Ringgit

The official explained that, although the regulation of the financial system depends on the ‘Ministry of Finance’, to which the central bank and the securities regulator are attached, “digital financial activities” are also part of the powers of the ‘Ministry of Housing and Local Government’.

On the topic of adopting Bitcoin as a legal tender, the Malaysian issuer has not yet issued a formal position. In January, the body told Bloomberg News that it was evaluating the issuance of a central bank digital currency (CBDC), or virtual Malaysian Ringgit.

Bank Negara Malaysia has made no comment on the remarks made by the Deputy Minister of Communications and Multimedia.

On the Flipside

What is known so far is that in September, the central bank formed a joint project with the Bank for International Settlements, in which Singapore, Australia, and South Africa also participate, called ‘Dunbar‘.
The aforementioned countries are testing the use of CBDCs for international payments through a shared platform.

Why You Should Care

The IMF has been promoting the adoption of blockchain technology, but through fiduciary digital currency projects which will compete with BTC and other cryptos.

In addition to Malaysia, other countries have been examining the potential of adopting BTC as legal tender, but none have yet taken the bold step.