Yahoo Finance Will Malaysia be next to make bitcoin legal tender?
A senior Malaysian government minister has called on his nation to adopt bitcoin as legal tender.
The move could make Malaysia the next country to follow El Salvador's lead and fall to the bitcoin domino effect.
El Salvador is the only country to have adopted bitcoin as its official currency, doing so in September 2021.
Speaking about bitcoin (BTC-USD) becoming legal tender in Malaysia, deputy minister of communications Zahidi Zainul Abidin spoke in the nation's parliament and said, “we hope the government can allow this".
This is the first signal that senior Malaysian officials are contemplating an El Salvador-style leap into crypto.
However, the country is not averse to digital currency, as it has been researching a central bank digital currency, CBDC, since September 2021.
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In January the Malaysian central bank announced it was working on a proof of concept "to enhance our technical and policy capabilities, should the need to issue a CBDC arise in the future".
Speaking to Yahoo Finance about Malaysia's CBDC research, Gunnar Jaerv, COO from First Digital Trust said: “Countries considering the introduction of central bank digital currencies, while deviating from the tenets of crypto, marks the early stages of the shift in the discourse on these issues, which is an important prerequisite to further, more tangible changes.”
After Zahidi's announcement on Tuesday, the Twitter-sphere exploded with anticipation with one high profile cryptocurrency advocate, called 'Crypto Ayda' saying, "it's like a domino now, one after another will become an orange nation and bitcoin adoption is inevitable".
But, what do leaders of the cryptocurrency sector from within Malaysia think of the news, are they as excited as the crypto netizens on the Twitter sphere?
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The Malaysian economy is much bigger than that of El Salvador, and according to Chainalysis' 2021 Global Crypto Adoption Index, it is ranked 23rd in the world for cryptocurrency use.
One expert from Malaysia has spoken to Yahoo Finance about the probability of the southeast Asian nation “adopting cryptocurrencies as a legal tender in the future is very high but in the current landscape, it’s a steep uphill battle.
Harpreet Maan, president of Access Blockchain Association Malaysia said: "Although legalisation and policy clearance on crypto is becoming a bipartisan stand in Malaysian politics, where both opposition and ruling parties are in favour of it, there are a few exceptions."
Maan did add that Malaysian authorities and regulators will require some time to catch up and develop policies to facilitate the adoption of cryptocurrencies as legal tender within the nation.
He added: "Malaysia is a relatively developed economy where we have strong institutions to facilitate traditional business sectors but we might have to restructure to facilitate the industries to come.”
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Maan added that the long term impact of the use of bitcoin within Malaysia "will be a positive driving force for our industries to become more competitive and innovative".
Malaysia is an innovative global leader of Islamic finance, and adopting bitcoin could have a strong influence on other global nodes of Islamic finance.
Gunnar Jaerv of First Digital Trust considers the challenge that the increasing adoption of cryptocurrencies is presenting to the world's nation-states.
He said: "However, what is clear is that nations all across the world have been forced to formulate crypto-related task forces, policies and regulatory frameworks.
"This is a reflection of sovereign nations being increasingly responsive to the needs and demands of their constituents and market forces, and of the crypto industry becoming too important to ignore."
"Young people are at the forefront of this shift, with the increasing merging of our physical and digital worlds powered by blockchain and emerging technologies shaping societal discourse on these topics.
"The increase in the usage of bitcoin and other cryptocurrencies is certainly reflective of the changing attitudes young people have towards the future of business and their personal finances.”
