Are you excited to start a crypto exchange in Malaysia? Looking for a perfect guide? Then you’re in the right place!

Starting a cryptocurrency exchange in Malaysia is a great opportunity to enter into Southeast Asia's fast-growing crypto market. It requires proper legal documents as well as regulatory standards to run the exchange.

In this blog, we’ll show you the way, with an ultimate guide to setting up a crypto exchange in Malaysia, from the key trends to the budget for building one.

Let’s search for the treasure!

Overview of Malaysia’s Crypto Regulations

Malaysia has taken early action to regulate cryptocurrencies before problems could arise. The Securities Commission Malaysia (SCM) is the primary regulator of digital assets. In January 2019, the Supreme Court officially recognized digital assets as securities under the Capital Markets and Services Act of 2007 (CMSA).

This means that anyone planning to operate a cryptocurrency exchange must register as a Recognized Market Operator (RMO) and obtain approval from the SC. These exchanges are commonly referred to as Digital Asset Exchanges (DAXs). As part of the registration process, operators must follow strict KYC (Know Your Customer), AML (Anti-Money Laundering), data protection, and cybersecurity standards.

The country's central bank, Bank Negara Malaysia (BNM), also plays a role in ensuring compliance with financial and anti-money laundering rules, particularly when cryptocurrency transactions include fiat currencies.

In short, Malaysia's regulatory framework is clear and structured, supporting legal cryptocurrency businesses to operate safely and protecting customers from fraud and financial threats.

A Simple Guide to Starting a Crypto Exchange in Malaysia

Launching a cryptocurrency exchange in Malaysia requires managing both technical and legal concerns. First, make sure that the Securities Commission's rules on digital assets are followed. Next, install safe infrastructure for user authentication and transactions. Lastly, create partnerships with banks and liquidity providers to guarantee flawless service. Here are more details.

Step 1: Register a Legal Business Entity

Register a company with the Companies Commission of Malaysia (SSM).
Ensure a clear ownership and management structure.
Appoint qualified directors and key personnel with relevant experience.

Step 2: Apply for a license

You must apply to the SC for approval as a recognised market operator (RMO). The application process includes:

Submitting detailed documentation on operations, security measures, and governance.
Meet the minimal capital requirements.
Showing strong cybersecurity protocols and anti-money laundering (AML) protections.

Step 3: Build a Secure Trading Platform

Your platform must be fast, secure, and user-friendly:

Real-time trading engine.
Integrated digital wallets (hot and cold).
Advanced encryption and DDoS protection.
KYC and customer onboarding system.

Step 4: Set Up AML/CFT Systems

Implement Know Your Customer (KYC) procedures.
Use tools to monitor transactions and detect suspicious behaviour.
Report unusual activities to the relevant authorities as required by law.

Step 5: Hire a Skilled Team

Ensure your team includes professionals in:

Blockchain technology
Legal and compliance
Cybersecurity
Financial services

If you’re looking for a skilled team, you can hire an expert like us.

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Step 6: Use Trading Features

Offering a variety of trading tools that are useful to both beginners and expert traders is essential for your crypto exchange to successfully compete. Some of the trading features are listed below:

Spot Trading
Margin Trading
Order Types
Advanced Charts & Analytics

Step 7: Conduct a Test

Test your platform in a controlled environment or regulatory sandbox.
Identify and fix bugs, security issues, or compliance gaps.

This phase shows that you are ready for the SC.

Step 8: Final Approval and Launch

Once your application is approved and your system is tested, you can go live.
Promote your platform, onboard users, and start offering crypto trading services.

Step 9: Maintain Ongoing Compliance

Provide regular reports to the SC.
Conduct independent audits.
Keep security and regulatory systems updated at all times.

Eligibility Criteria to Launch Cryptocurrency Exchange in Malaysia

Now, you have an idea about regulatory standards, move on to the eligibility criteria to launch a crypto exchange service in Malaysia.

Company Formation: You should set up a Malaysian-incorporated business or Limited Liability Partnership (LLP).

Business Presence: You must place your main company activities and office space in Malaysia.

Minimum Capital: You should have a minimum paid-up capital of RM500,000.

Fit and Proper Check: The Securities and Exchange Commission (SEC) will perform a "fit and proper" review on all participants, including directors, controllers, and senior management.

Responsible Person: You should select a responsible person (the CEO, CFO, or COO of the organization).

Risk Management: You must build strong internal audit methods and create risk management matrices, methods, and regulations.

AML/CFT Compliance: You have to follow Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) principles and FATF standards.

Customer Protection: You'll need systems to monitor transactions and market activity, keep liquidity for client funds, and secure customer assets and data.

Approved Cryptocurrencies: You are only permitted to offer cryptocurrencies that have been authorized by the Securities Commission.

Security: You must have adequate security procedures, including a secure environment and managing cyber risks.

Virtual Asset Service Provider (VASP) License: To run a cryptocurrency exchange, you must receive a VASP license from the Securities Commission.

Crypto Exchange Development Cost in Malaysia

The cost of starting a crypto exchange in Malaysia ranges from $50,000 to $100,000 with all of the basic features. Startups with limited financial resources can opt for affordable exchange solutions.

The minimum share capital of crypto exchanges ranges from RM500,000 to possibly millions for development and operations, depending on the exchange's size and features.

Enterprises that are stable or even startups with major funds to spend should design custom-built, flexible exchanges with the most modern security and feature capabilities. The budget might range from $250,000 to $500,000, or even higher, depending on the extra features you want to incorporate, such as marketing and advertising services.

Conclusion

In the rising demand for digital assets, opening a cryptocurrency exchange in Malaysia provides an enormous opportunity. However, a solid knowledge of the regulatory environment, powerful partnerships, and a safe, user-friendly platform are all needed for success. The next plan is to choose the right development company that you’re going to collaborate with.

Here’s where Hashcodex enters. We’re a licensed, trustworthy crypto exchange development company with great knowledge of regulations and compliance in Malaysia. We’ve done 95% of successful projects and served 25+ countries with experienced and skilled developers. Our AI-powered trading engines, deep liquidity pools, and better interface help you lead the market.