Cryptocurrency in Malaysia: Exploring Investment Options (2024)

It’s been all over finance news – cryptocurrency is bouncing back in 2024. If you’re considering the best investments in Malaysia right now, you’re probably wondering if there’s any truth to this statement and if you should be investing in digital currencies.

In recent times, the world of investments in Malaysia and across the globe have been buzzing with excitement, particularly about cryptocurrency. Stories like a Malaysian individual profiting RM 846 million from Bitcoin, have captured the imagination of many.

With this surge of interest, we’re diving deeper into the available investments in Malaysia, including cryptocurrency.

Investments in Malaysia: The Landscape

Malaysia, known for its dynamic economy and diverse investment landscape continues to attract significant investments across various sectors. There’s a variety of avenues for investors, from traditional to alternative investments.

Some of the common traditional investments are:

• Stocks: Investing in equities offers the potential for growth through capital gains and dividends. While stocks can provide substantial returns, the market is susceptible to fluctuations based on economic indicators, market sentiment, and company performance.
• Bonds: Bonds are perceived as safer investments than stocks, providing a steady income stream through interest payments. However, they are not immune to risks such as interest rate changes and the creditworthiness of the issuer, which can affect their value and yield.
• Property: Investing in real estate is often lauded for its potential to appreciate and generate rental income. Nonetheless, real estate requires significant capital outlay, involves maintenance costs, and can be less liquid than other investment types.

Alternative Investments:

• Cryptocurrencies: Representing a shift towards digital assets, cryptocurrencies offer unparalleled opportunities for high returns. Their decentralised nature and blockchain technology promise transparency and efficiency. However, their price volatility and evolving regulatory framework present unique challenges to investors.

What is Cryptocurrency?

Cryptocurrency, like Bitcoin or Ethereum, is a type of digital money that operates independently of traditional banks. It’s like an online version of cash that you can use to buy goods or services, but with a few key differences. One major difference is that transactions made with cryptocurrency are recorded on a technology called blockchain.

Think of blockchain as a public ledger or a list that keeps track of all transactions openly and securely. This system ensures that digital money can’t be copied or counterfeited, making it a unique and secure form of currency.

When it comes to keeping this digital currency, people use something called a digital wallet, which works much like an app on your smartphone or computer. This wallet keeps your digital money safe and allows you to send or receive cryptocurrencies.

In Malaysia, buying cryptocurrencies like Bitcoin, Ethereum, Litecoin, and others is facilitated through licensed exchanges such as Luno, SINEGY, Tokenize, and MX Global.

Should You Invest in Cryptocurrency?

Cryptocurrency offers several benefits, including the potential for high returns, enhanced privacy during transactions, and accessibility without needing traditional bank accounts. However, the market is known for its volatility, and investments can fluctuate widely in value. Regulatory uncertainties and the risk of scams also create challenges for users​.

Adopting a cautious approach is crucial when venturing into cryptocurrencies. Diversify investments, use secure and reputable exchanges, and store assets in private wallets to mitigate risks. Here’s a checklist of learnings and considerations to review before investing in cryptocurrency:

• Understand the Basics: Do I have a clear understanding of what cryptocurrencies are and how they work?
• Market Volatility: Am I prepared for the high volatility and the possibility of losing money?
• Investment Goals: Does investing in cryptocurrencies align with my financial goals and risk tolerance?
• Regulatory Landscape: Am I aware of the current regulations surrounding cryptocurrencies in my country?
• Security Measures: Do I know how to securely store and manage my cryptocurrency investments?
• Diversification: Will cryptocurrencies be a part of a diversified investment portfolio?
• Research: Have I researched the specific cryptocurrencies I’m interested in investing in?
• Scam Awareness: Can I identify common scams and red flags in the cryptocurrency space?
• Long-Term Perspective: Am I looking at cryptocurrency as a long-term investment or a quick gain?
• Professional Advice: Should I consult with a financial advisor experienced in cryptocurrencies?

By understanding how cryptocurrencies work and navigating their challenges with informed caution, investors in Malaysia can potentially leverage digital currencies to diversify their portfolios and explore new financial frontiers.

The Cryptocurrency Market in Malaysia

When crypto appears in discussions about investments in Malaysia, there is a clear difference between the keen younger investors and hesitant institutions. Digital currencies are catching the eye of the youth, excited by their fresh approach and the potential for high returns.

However, others are a little more sceptical. Bursa Malaysia’s cautious approach towards cryptocurrency integration signals that there is some caution amidst the excitement of crypto. And it’s an example of how the market outlook fluctuates as it changes rapidly.

What Are the Other Opportunities for Investments in Malaysia?

Beyond the digital currency realm, there are many types of investments you can explore with unique advantages for various risk appetites and financial goals.

The key is to diversify your investment portfolio to balance out your risk levels while maximising potential returns. By spreading investments across various asset classes, sectors, or geographies, you can reduce the impact of poor performance in any single area on your overall portfolio. This approach takes advantage of the fact that different investments often perform differently under the same economic conditions, balancing out the overall risk and return.

Let’s break down the alternative investments in Malaysia:

Mutual Funds & Unit Trusts

These investment vehicles pool money from many investors to purchase a diversified portfolio of shares, bonds, or other securities.

Advantages:

• Professional Management: Fund managers make investment decisions, suitable for those who prefer a hands-off approach.
• Diversification: Instant access to a diversified portfolio, reducing risk.
• Accessibility: Lower minimum investment thresholds make it easier for individual investors to participate.

Peer-to-Peer (P2P) Lending

P2P lending platforms connect borrowers with investors who are willing to lend their money for an agreed return.

Advantages:

• Higher Returns: Often offers higher returns compared to traditional bank deposits.
• Diversification: Provides an alternative income stream and diversification away from traditional asset classes.
• Flexibility: Investors can choose which loans to fund based on their risk preference.

Commodities

Investing in commodities such as gold, palm oil, or rubber can be another way to diversify.

Advantages:

• Hedge Against Inflation: Commodities often perform well during inflationary periods.
• Diversification: Different performance patterns compared to traditional shares and bonds.
• Potential for Growth: Demand-driven commodities have growth potential based on market trends.

Forex Trading

The foreign exchange market (Forex) involves trading currencies against one another.

Advantages:

• High Liquidity: The Forex market is one of the largest and most liquid investment markets globally.
• 24-Hour Market: Forex markets operate 24 hours a day, offering flexibility for traders.
• Leverage: Traders can control large positions with a relatively small amount of capital.

Private Equity

Investing in private companies can offer high returns, albeit with higher risks.

Advantages:

• High Return Potential: Significant profit potential if companies succeed or go public.
• Influence: Investors may have a say in business decisions, depending on the level of investment.
• Diversification: Adds another layer of diversification, especially for portfolios concentrated in public markets.

Considerations for Investors

Diversifying your portfolio is a strategy to manage risk, but it doesn’t eliminate it. Anyone thinking of investing should consider their risk tolerance, investment objectives, and time horizon before making decisions.

What you need to consider:

Market Risk: The value of investments can go down as well as up due to market fluctuations, and you may not get back the amount you invested.

Liquidity Risk: Some investments may be hard to sell quickly without potentially incurring a significant loss.

Interest Rate Risk: Changes in interest rates can affect the value of fixed-income investments.

Currency Risk: Investing in assets denominated in foreign currencies can lead to losses due to fluctuations in exchange rates.

Inflation Risk: The purchasing power of your investment returns may be eroded by inflation over time.

Thorough research and, if necessary, consultation with a financial adviser can help align your investment choices with your financial objectives.

Navigating Cryptocurrency & Investments in Malaysia

Exploring investments in Malaysia has underscored the importance of diversification, from traditional assets to digital currencies. With all kinds of investments in the market, you can build a portfolio with a balanced mix of assets.

Are you ready to invest but want to start with a lower entry barrier? The good news is, you can start investing even with minimal funds. We offer a range of investment options tailored to your financial needs and you can start investing with as low as RM100. Discover more about how Funding Societies can help you navigate your investment path now.

Cryptocurrency in Malaysia: Frequently Asked Questions (FAQ)