The Shariah Advisory Council (SAC) of Malaysia’s Securities Commission has issued a landmark resolution: investing and trading cryptocurrencies on registered exchanges like Luno are Shariah-compliant in principle. This decision empowers Malaysia’s Muslim-majority population (60%, or 19.43 million people) to participate in the digital asset economy while adhering to Islamic financial principles.
Key Announcement Details
- Event: Revealed during Invest Malaysia 2020 via teleconference.
- Authority: Datuk Syed Zaid Albar, SC Chairman, confirmed the resolution.
- Scope: Applies to registered digital asset exchanges (including Luno, one of three approved by the SC).
Datuk Syed Zaid Albar stated: “This ground-breaking resolution could spur greater development and investment in digital assets. Further details will follow once finalized.”
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Understanding the Shariah Advisory Council
Role and Mandate
Established in 1996 under Malaysia’s Ministry of Finance, the SAC ensures the Islamic Capital Market (ICM) complies with Shariah principles. Its core functions include:
1. Advising the Securities Commission on ICM development.
2. Serving as a reference center for Shariah-compliant financial practices.
Shariah-Compliant Securities
Securities listed on Bursa Malaysia must meet criteria such as:
– Halal primary business activities.
– Ethical investment practices (e.g., no involvement in gambling or prohibited commodities).
The Islamic Capital Market (ICM) Explained
The ICM operates parallel to Malaysia’s conventional market, adhering to Islamic finance principles:
– Prohibitions: Riba (interest), gharar (ambiguity), maisir (gambling).
– Requirements: Transactions must align with trade/commerce (al bai’) and avoid haram industries (e.g., alcohol, pork).
Core ICM Principles
| Principle | Description |
|---|---|
| Riba-free | No interest-based transactions. |
| Asset-backed | Investments tied to tangible assets. |
| Ethical focus | Excludes harmful or speculative activities. |
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FAQs: Shariah-Compliant Crypto Trading
1. Is crypto trading halal in Malaysia now?
Yes, provided it occurs on registered exchanges like Luno, per the SAC’s resolution.
2. What makes a cryptocurrency Shariah-compliant?
– Must avoid interest (riba) and speculative uncertainty (gharar).
– Underlying projects should serve ethical purposes (e.g., healthcare, education).
3. Which exchanges are approved by Malaysia’s SC?
Luno and two others (unnamed in public reports).
4. How does the ICM differ from conventional markets?
ICM prohibits unethical industries and interest-based profit models.
5. Will Malaysia regulate DeFi under Shariah law?
The SAC has not yet issued guidelines for decentralized finance.
6. Can Muslims mine cryptocurrencies?
Mining’s permissibility depends on energy sources and intent; renewable-energy mining is more likely to comply.
Conclusion
Malaysia’s progressive stance on Shariah-compliant crypto trading bridges Islamic finance with blockchain innovation. By partnering with regulated platforms like Luno, investors gain access to ethically vetted digital assets.