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!

Key Cryptocurrency Trends and Statistics in Malaysia

Cryptocurrency usage in Malaysia has recently risen because of stronger government support and a growing number of local blockchain companies. Let’s see accurate stats and trends:

• Malaysia's cryptocurrency industry revenue is expected to reach US$290.9 million by 2025.
• The average revenue per user in the cryptocurrency sector is predicted to be US$62.6 by 2025.
• By the end of 2025, Malaysia is estimated to have 4.65 million crypto users.
• The user penetration rate or the percentage of the population using cryptocurrency is expected to reach 13.27% in 2025.

Knowing these trends will help you realize how profitable it is to set up a crypto exchange in Malaysia right now.

Step-by-Step Guide to Start 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: Conduct Market Research

Examine Malaysia's present cryptocurrency market. Calculate the amount of trade, the number of active cryptocurrency users, and the most popular cryptocurrencies. Analyze opponents to learn about their strengths and areas of improvement to enhance your platform. The user interface (UI) and features of your platform will be based on your understanding of your client, so consider their requirements and proceed further.

Step 2: Apply for a license

In Malaysia, a proper license is a must to operate a cryptocurrency exchange. A local firm must be built, a Digital Asset Exchange Operator (DAX) license is required from the Securities Commission Malaysia (SC), and rules related to AML/CFT, risk management, and capital requirements should be followed. 

Step 3: Collaborate with Payment Providers

The capacity to send and receive fiat currency such as Malaysian Ringgit and MYR is essential for any cryptocurrency exchange. Interact with Malaysian banks and confirm that the bank partners you select are willing to work with crypto firms. You can also consider a payment gateway that supports digital currency transactions.

Step 4: Deploy the Technology Stack

A strong technical stack is crucial for cryptocurrency exchange development. Select the programming languages, blockchain platforms, frontend and backend frameworks, databases, security, and APIs to use on your platform. By choosing wisely, you can make your crypto exchange standard and consistent apart from others.

Step 5: 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 6: Customer service 

Customer service plays an important role in improving profitability by ensuring faster transactions. Make sure you have a variety of support channels available, including email, live chat, and a complete FAQ area. A customer service department that is open 24/7 can improve client satisfaction. Regular monitoring is also required to provide good service to customers.

Regulatory Standards for Crypto Exchange Business in Malaysia

In Malaysia, legal documents and activities should be strictly followed in the development of the crypto exchange business. Here are the regulatory frameworks in Malaysia you should be aware of:

• The Securities Commission of Malaysia is the primary regulator that developed a regulatory framework, which classifies digital tokens and digital currencies as securities governed by securities laws.
• The Digital Asset Guidelines should be read completely with the relevant sections of the securities rules that relate to digital assets, as specified in the Capital Markets and Services Act of 2007 (CMSA).
• IEOs must be conducted by operators who have the authority to accept prospective buyers' applications. These operators are electronic platform providers that have registered with the Digital Asset Guidelines to run an IEO platform.
• Currently, it has been disclosed by both the Securities Commission and Bank Negara Malaysia. They are accepted as legal funds for the exchange of services and products in Malaysia.

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. 

How Much Does it Cost to Start a Crypto Exchange 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.