Malaysia Proposes Major Enhancements to Digital Asset Exchange Framework Amid Surging Market Growth

Malaysia’s Securities Commission (SC) has unveiled a consultation paper proposing sweeping upgrades to its Digital Asset Exchange (DAX) regulatory framework, following a dramatic rise in market activity that saw trading volumes soar to RM13.9 billion ($3.29 billion) in 2024 — a 2.6x increase from the previous year.

The public consultation, which runs from June 30 to August 11, 2025, aims to modernize Malaysia’s digital asset regulations by liberalizing asset listings, tightening oversight on exchange operators, and reinforcing investor protection mechanisms.

Growing Institutional Interest and Market Maturity

According to SC Malaysia, the country’s regulated digital asset landscape has matured considerably since the DAX framework was introduced in 2019. The market now attracts a broader range of participants, including institutional investors and traditional capital market intermediaries looking to gain exposure to digital assets.

The regulator noted that the evolving market dynamics require a regulatory approach that balances innovation with responsibility — ensuring that digital asset exchanges operate in a fair, transparent, and orderly environment.

Key Areas of Proposed Reform

The consultation paper outlines three major areas of enhancement to the existing DAX framework:

1. Liberalized Digital Asset Listings
   The SC is proposing to remove the requirement for direct regulatory concurrence for certain digital asset listings, provided they meet a predefined set of minimum standards. This would allow exchanges to bring new assets to market faster while holding DAX operators accountable for due diligence and compliance.
2. Stronger Safeguards and Governance
   Enhanced operational requirements are also on the table, including stricter client asset segregation rules and improved internal governance standards. The SC emphasized that these controls must be aligned with each operator’s specific risk profile and business model.
3. Higher Financial Standards for DAX Operators
   New financial requirements will be introduced to ensure DAX operators possess the capital strength and operational resilience necessary to function reliably in a growing and increasingly complex market.

A Push Toward Regional Leadership

The SC framed the proposed changes as part of Malaysia’s broader ambition to become a leading regional hub for digital assets. By strengthening the regulatory foundation while enhancing market agility, the SC hopes to encourage innovation and investor participation without compromising on safety or integrity.

The regulator is actively seeking input from a wide range of stakeholders, including DAX operators, digital asset issuers, financial institutions, legal professionals, and industry associations.

July 2025, Cryptoniteuae