Shariah Governance and Regulatory Dynamics of Cryptocurrencies in Malaysia:

Abstract

Malaysia, as a pioneer in the Islamic finance sector, is currently facing new challenges regarding the Shariah legitimacy and the governance of cryptocurrency assets. In this paper, a narrative review is presented by systematically integrating peer-reviewed studies, resolutions from the Shariah Advisory Council, regional fatwas, several important guidelines, and the operational dynamics that shape crypto assets in the Malaysian context. This study focuses on five main areas. The first area is the Islamic law interpretation of crypto assets as māl and how they relate to the prohibitions of gharar, maysir, and riba. The second area is the alignment and gaps in digital asset regulations from the Securities Commission and Bank Negara Malaysia. The third is the structure, audit practices, andtransparency of Shariah advisory boards at licensed exchanges. The fourth area covers early ESG and social impact projects like tokenised waqf and zakat using blockchain. Finally, the fifth area looks at investor protection and dispute resolution models. The studyreveals that there are different fatwas about crypto status and only a partial match between regulations and fiqh, and uneven governance standards. Furthermore, the integration of ESG and zakat initiatives remains incomplete, while Shariah-compliant frameworks for dispute resolution are still absent. Finally, this paper concludes by recommending the creation of a centralised fatwa repository, the implementation of both on-chain and off-chain Shariah audit protocols, a proper integration of the ESG-zakat dashboard, and an interdisciplinary collaboration to pilot robust governance frameworks.