Malaysia refuses to recognize cryptocurrencies as legal tender including Bitcoin. Mohd Shahar Abdullah, the Deputy Finance Minister in Malaysia said, "Cryptocurrencies like Bitcoin are not suitable for use as a payment instrument due to various limitations."
The limitations the Malaysian Deputy Finance Minister referred to are security concerns and volatility. His remarks contradicted, Zahidi Zainul Abidin, the Deputy Minister of Malaysia's Communications and Multimedia Ministry's remarks from several days ago.
Zahidi Zainul Abidin urged the government to adopt Bitcoin earlier this week.
Malaysia CBDC
Although Malaysia will not follow El Salvador at this stage, the country is participating in Project Dunbar. The project is testing central banks digital currencies (CDBC).
source: BIS
The participating central banks are the Reserve Bank of Australia (RBA), Bank Negara Malaysia (BNM), the Monetary Authority of Singapore (MAS) and the South African Reserve Bank (the Bank).
The aim of the project is to improve cross-border payments. Via digital currencies, cross-border transactions may be cheaper, faster and secure.
The benefits of such a system will reduce the need for an intermediary. Central banks can communicate directly with each other via CBDCs without the necessity of holding foreign currencies.
source: BSI
Project Dunbar commenced in September 2021, it may take some time until it is implemented.
Crypto Mining Woes
Malaysia is suffering from illegal bitcoin mining. The crypto miners steal electricity for their equipment, which increased electricity usage in 2021 by 400%.
The estimated loss of electricity theft in Malaysia is estimated to have reached $550 million. The number of illegal bitcoin miners peaked to 7,209 in 2021 from 610 in 2018.
Tenaga Nasional Berhad (TNB) proposed the government to impose tariffs on bitcoin miners. At the time of writing, crypto mining is legal in Malaysia.
As bitcoin mining consumes a significant amount of energy, more countries may consider imposing special tariffs on mining cryptocurrencies.
