Malaysia gives the green light! Planning to recognize cryptocurrencies in 2026, 5 digital banks rush to enter the market

Malaysian Prime Minister Anwar Ibrahim stated this year that the government is considering formulating policies to formally recognize the status of cryptocurrencies and blockchain technology in Malaysia. He emphasized that digital financial development is progressing rapidly, and Malaysia must accelerate its pace to avoid being left behind in the outdated financial system. Five licensed digital banks will be fully launched by 2025, including GX Bank, Aeon Bank, and others.

Anwar ignites the turning engine of crypto policy

Earlier this year, Malaysian Prime Minister Dato Sri Anwar Ibrahim’s remarks set the tone for Malaysia’s cryptocurrency policy. He said that the government is considering developing a policy that, if implemented, will officially recognize the status of cryptocurrencies and blockchain technology in Malaysia. Such remarks are quite rare among Southeast Asian countries, as most nations remain cautious or restrictive towards cryptocurrencies.

Anwar stated, “Digital financial development is progressing rapidly,” and added that Malaysia must accelerate its steps to avoid being trapped in the old financial system. This sense of urgency reflects the Malaysian government’s clear understanding of global fintech competition. Singapore and Hong Kong have already established mature crypto regulatory frameworks, attracting numerous blockchain companies and investments. If Malaysia’s cryptocurrency policy continues to lag, it may lose in this Southeast Asian financial center race.

To support this direction, Malaysia has launched a Digital Asset Innovation Center to encourage financial innovation within a regulatory framework. This innovation center offers a regulatory sandbox mechanism, allowing blockchain companies to test new products and services in a controlled environment while maintaining close communication with regulators. This “pilot first, scale later” strategy balances innovation with risk control and lays the groundwork for future full-scale crypto business openness.

Malaysia’s banking and financial system demonstrate strong resilience, largely unaffected by recent cryptocurrency market downturns. Meanwhile, the global cryptocurrency market is expected to maintain growth momentum next year, with the influx of major participants over the past two years potentially further driving institutional adoption. This macro environment provides a favorable opportunity for Malaysia’s crypto policy advancement.

5 Digital Banks Fully Enter the Market: 4% Interest Rate Revolution

All five licensed digital banks will be fully launched by 2025, reshaping Malaysia’s digital financial landscape and marking a decisive shift toward a more inclusive and technologically driven financial ecosystem. These digital banks include GX Bank Bhd, Aeon Bank Bhd, Boost Bank Bhd, KAF Digital Bank Bhd, and Ryt Bank.

Following GX Bank’s debut in 2023 and the market entry of Aeon Bank and Boost Bank in 2024, KAF Digital Bank began operations on August 8, 2025, after receiving approval from Bank Negara Malaysia (BNM). The first fully AI-powered digital bank in the country, Ryt Bank, supported by Yang Zongli Group and Singapore’s Sea Ltd, started operations on August 25, 2025.

Digital banks are attracting public attention and laying the foundation for a more competitive and inclusive financial ecosystem. From high-yield “secure savings accounts” to reward points and other benefits, many digital banks offer highly competitive interest rates in the market, around 3.0% to 4.0% annually. These rates are far higher than traditional banks’ 1% to 2%, making them very attractive for people seeking deposit returns.

E-wallets and partnerships with insurance companies, such as Aeon Bank and GX Bank, are serving groups that traditional markets do not adequately serve. Industry insiders say that digital banks are now shifting focus toward business accounts, sparking a wave of tailored services for micro, small, and medium-sized enterprises (MSME) and large corporations.

Three Major Competitive Advantages of Malaysia’s Digital Banks

High Interest Rates to Attract Deposits: 3% to 4% annual interest rates far surpass traditional banks, attracting large-scale deposit transfers

AI-Driven Services: Ryt Bank adopts full AI systems, offering personalized financial solutions and real-time customer service

Zero Physical Costs: No physical branches reduce operational costs, enabling more attractive products and faster services

These fully digital, branchless banks are also breaking down barriers for rural communities and gig economy workers. Meanwhile, AI-driven analytical technologies allow financial solutions to be delivered at speeds and precision levels unattainable by traditional banks. This technological advantage will play a key role in integrating cryptocurrencies in Malaysia, as custody, trading, and compliance review of crypto assets heavily rely on automation systems.

Digital Banks as Natural Bridges for Crypto Integration

Beyond personal banking, digital banks are increasingly integrating their services with government initiatives. Many industry insiders believe this helps distribute subsidies and cash aid more efficiently and fairly, providing alternatives to traditional channels, similar to current e-wallets or MyKad-based systems. Deep integration with government systems lays the foundation for future crypto payments and digital asset services.

The technological architecture of digital banks is naturally suitable for integrating crypto services. Traditional banks’ core systems are often based on decades-old technology, making large-scale blockchain integration challenging. Digital banks, built from scratch with cloud-native architecture and API-driven design, can easily connect to crypto exchanges, stablecoin protocols, and blockchain infrastructure. This technological flexibility could make digital banks among the first providers of crypto services in Malaysia.

The arrival of five digital banks is expected to accelerate the adoption of digital banking, intensify competition, promote innovation, and foster a more active digital economy, while also bringing new responsibilities to regulators and traditional banks. Competitive pressure will drive product innovation and service upgrades, with cryptocurrency services potentially becoming a key differentiator. If a digital bank is the first to be approved for offering crypto custody or trading, it will gain a significant first-mover advantage.

Malaysia’s crypto market potential is considerable. The country has a population of about 32 million, over 80% of whom own smartphones, and digital payment usage ranks among the highest in Southeast Asia. If crypto services are promoted through the convenience of digital banking interfaces, penetration could rapidly increase. Additionally, Malaysia’s proximity to Singapore, with many Malaysians working or doing business there, creates strong cross-border payment demand. Stablecoins and crypto payments have clear advantages in this scenario.

Three Key Indicators for Policy Implementation in 2026

The global crypto market is expected to continue its upward trend next year. In Malaysia, this outlook is reflected in increasing public interest, rising institutional participation, and renewed policy discussions—highlighting Malaysia’s gradual transition into the digital finance era. While Anwar’s remarks are positive, specific policy details have yet to be announced. Whether policies will truly be implemented in 2026 depends on several key indicators.

First is the official regulatory framework from Bank Negara Malaysia (BNM). Anwar’s statement is a political signal, but actual implementation requires the central bank to develop detailed licensing standards, compliance requirements, and consumer protection measures. If BNM issues formal guidance for Virtual Asset Service Providers (VASPs) in the first half of 2026, it will mark a transition from concept to implementation.

Second is the timetable for digital banks to offer crypto services. Currently, all five digital banks focus on traditional deposit and lending services and have not publicly announced plans for crypto custody or trading. However, given their technological strengths and innovation orientation, once regulated, these banks may quickly integrate crypto features. If digital banks launch crypto accounts or stablecoin payments in 2026, it will be the clearest sign of policy realization.

Third is the tangible results of the Digital Asset Innovation Center. After its launch, does it attract international blockchain firms? Has it incubated local crypto startups? The number and quality of test projects will reflect Malaysia’s crypto ecosystem activity.

If Malaysia’s cryptocurrency policies are truly implemented in 2026, it will reshape Southeast Asia’s crypto landscape. Striking a balance between strict regulation like Singapore and the more relaxed environment of Thailand could attract businesses seeking compliant yet less overregulated environments.