To this day, Bitcoin has only been adopted as an official currency in El Salvador.
6 months ago, El Salvador became the first country in the world to make bitcoin legal tender.
Will Malaysia follow suit?
According to Bloomberg, Zahidi Zainul – Deputy Minister of Communications and Multimedia – believed that Malaysia should recognize Bitcoin as well as other crypto assets as legal tender. “We hope the government can allow this,” he responded when asked about the government’s take on NFT marketplaces. Parliament.
Some highly recognizable sectors that the Communications and Multimedia Ministry regulate are broadcasting and internet infrastructure, along with some smaller areas like digital signatures. Their proposal to adopt cryptocurrency as legal tender would also have to be approved by the Ministry of Science, Technology and Innovation as well as the Ministry of Finance before it could be implemented.
Following the lead of many other countries, Malaysia’s government is researching a central bank digital currency. Last September, its central bank partnered with central banks in Australia, Singapore and South Africa to conduct a cross border payments trial, with the Bank for International Settlements leading the trial. January 2022, the central bank of Malaysia made an announcement that 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.” However, it is still too soon to say that Malaysia is ready for Bitcoin to become its legal transfer.
Basically, central bank digital currencies could be considered electronic versions of the existing national currency, in this case the ringgit. Nonetheless, cryptocurrencies are independent from the governments, not being subject to any central authority. Central banks, hence, can’t govern Bitcoin like other traditional financial assets. Interest rate increases or bond-buying will not be able to regulate the crypto market.
The fluctuations in Bitcoin prices might be the primary reason why Malaysia has yet to consider making it the legal tender. For bigger countries where their governments could become BTC whales, they could regulate the market by buying or selling the asset. Last September, BTC price was above $50,000 when El Salvador made it their legal tender. It has since peaked at $68,000 but has also dipped below $34,000. Bitcoin has not gained its popularity as a medium of exchange, most businesses in El Salvador haven’t had any BTC transactions. They still rely on the U.S. dollar for transactions.
However, Malaysia with a higher-earning population, has a more diverse economy than El Salvador. There are more crypto users in this Southeast Asian country, ranking 23rd for adoption according to Chainanlysis’ 2021 Global Crypto Adoption Index.
