Malaysia proposes to adopt cryptocurrency as legal tender

Malaysia’s deputy minister of communications and multimedia, Datuk Zahidi Zainul Abidin has advocated making cryptocurrencies legal tender. He also stated that the ministry is investigating ways to increase cryptocurrency usage among younger generations.

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Datuk Zahidi Zainul Abidin has advocated making cryptocurrencies legal tender

After El Salvador, Malaysia could be the next country to make cryptocurrency official tender. Malaysia’s deputy communications and multimedia minister, Datuk Zahidi Zainul Abidin, has suggested that the country embrace cryptocurrencies as legal cash to help the country’s youth, who are the most active users of the technology.

In January, Malaysia’s central bank announced that it was considering creating its cryptocurrency, which might undermine the concept of cryptocurrency as a legal tender. Malaysia’s central bank is rumored to be testing a central bank digital currency. The Central Bank of Malaysia has been debating whether introducing its own central bank digital currency would be beneficial to the country, according to an email statement to Bloomberg.

“We are actively analyzing the value proposition of [a] central bank digital currency (CBDC) to Malaysia,” Malaysia’s Central Bank noted.
The Central Bank joined Project Dunbar in September 2021, which aims to test the utility of central bank digital currencies in foreign settlements, which are notoriously delayed and expensive.

In the view of the Bank of International Settlements, a project member institution, the project’s outcomes have been encouraging, with “a multi-CBDC platform” having the potential to “substantially improve cross-border payments.”

Malaysia’s Central Bank warned in its Annual Report for 2020 that the majority of digital assets were bad currencies due to their volatility, vulnerability to cyber threats, and scalability concerns. The Central Bank, on the other hand, actively weighed the risks and rewards even back then. In the end, Malaysia’s Central Bank concluded that a CBDC “may be an instrument to attain broader public policy aims” rather than being “an end in itself.”

According to the BIS, current technologies, such as distributed ledgers and “the programmability of smart contracts and CBDCs,” have helped address many of the issues and questions surrounding CBDCs for international settlements.

The Deputy Communications and Multimedia Minister said that because digital currencies are the future of money, the ministry will explore ways to encourage youth involvement in them.

“Bank Negara Malaysia and the Securities Commission are in charge of all of this. We hope the government would authorize and legalize this so that the youth will be more interested in cryptocurrency,” he stated.

El Salvador remains the only country in the world to have made Bitcoin legal tender, despite several reports of various governments and politicians expressing interest in doing so.

Also read: Indian government working to classify cryptocurrency under GST law

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