In brief
On 30 January 2026, the Securities Commission Malaysia (SC) provided clarity on the regulatory framework governing the offering of broking services for digital assets.
The SC has affirmed the position that Capital Markets Services Licence holders for dealing in securities and dealing in securities restricted to listed securities (collectively, "CMSL Holders") are permitted to offer broking services in respect of digital assets that satisfy the prescribed criteria of "securities" under the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019. However, such CMSL Holders must comply with the applicable requirements and restrictions, including (among others) submitting a prior notification to the SC; submitting to the SC a declaration on the system and operational readiness of the CMSL Holder; and trading only in prescribed digital assets.
In more detail: Salient Requirements and Restrictions
The salient requirements and restrictions on CMSL Holders offering digital asset broking services include:
(i) Prior Notification and Declaration to the SC
A CMSL Holder intending to offer broking services for digital assets must notify the SC in advance and submit a declaration that is validated by a third party auditor registered with the Audit Oversight Board, confirming the readiness of the CMSL Holder's systems and operations.
(ii) Restrictions on Trading in Digital Assets
A CMSL Holder is subject to the following restrictions:
(a) Digital assets must have obtained concurrence of the SC, and can only be sourced from a registered digital asset exchange; or an offshore digital asset trading platform or counterparty which is regulated in a jurisdiction that gives effect to the Financial Action Task Force recommendations for virtual asset service providers, and maintains risk‑based AML/CFT/CPF controls supervised by a competent authority
(b) All transactions with clients are conducted on a cash‑upfront basis
(c) It cannot provide margin or lending facilities to clients
(d) It must refrain from exercising discretionary authority over its client's digital asset trading account.
(iii) Client Asset Protection
There are safeguarding requirements for purposes of client asset protection, and therefore CMSL Holders must maintain a segregation of client assets; ensure that the digital assets are held with a digital asset custodian and any income or benefits from the digital assets must accrue to the client.
Conclusion and next steps
With clearer regulatory parameters for CMSL Holders intending to offer digital asset broking services, industry players should undertake a thorough assessment of the applicable obligations and restrictions to ensure that their internal controls, custody arrangements, and trading protocols are fully aligned with the SC's regulatory expectations prior to commencing such broking services, or opting to obtain a CMSL from the SC to do so.
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Eliza Chow and Raynice Chew, Associates, have contributed to this legal update.
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