Cryptocurrency is becoming a vital part of modern estate planning as more investors include digital assets in their wealth portfolios. Although crypto is intangible, it holds significant value and presents unique challenges for inheritance and legacy planning. Its growing use in private foundations and charitable giving also highlights its importance in long-term financial strategies. As a result, estate planners must develop secure and efficient methods to manage and transfer these assets.
Can a Foundation in Malaysia Hold Cryptocurrency?
Legal Status Under Malaysian Law
In Malaysia, Companies Limited by Guarantee (CLBGs)—the typical structure for foundations—are governed by the Companies Act 2016. Currently, there are no specific legal restrictions under this Act that prevent CLBGs from holding cryptocurrencies. However, any such activity must be consistent with the foundation’s stated objectives. For example, a foundation focused on technology development, education, or wealth preservation may find it justifiable to hold digital assets as part of its strategic vision.
Alignment with Foundation Objectives
Before acquiring cryptocurrency, a foundation must ensure that this aligns with its mission and purpose. Digital assets may be held if they support activities such as:
- Funding educational technology programs
- Supporting blockchain-related research
- Preserving long-term value through diversified investment strategies
Clear documentation of intent and policy alignment is key to defending such holdings under legal and financial scrutiny.
Compliance and Recordkeeping Requirements
Foundations must also adhere to strict compliance standards. Although cryptocurrencies are not recognized as legal tender in Malaysia, they are regulated under securities laws when considered investment instruments. The Securities Commission Malaysia (SC) oversees digital assets classified as securities, and compliance with the Capital Markets and Services Order 2019 is essential.
In addition, the Bank Negara Malaysia (BNM) requires organizations involved in digital assets to comply with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) guidelines. This includes:
- Conducting customer due diligence
- Maintaining accurate transaction records
- Reporting suspicious activities
How Cryptocurrency Can Be Passed to a Foundation
Transferring cryptocurrency to a foundation involves careful planning to ensure legal, secure, and purposeful asset transfer. Common methods include including the foundation in a will, establishing a trust deed that assigns crypto assets, or gifting the cryptocurrency while still alive. Each method has its benefits—trusts offer privacy and control, while lifetime gifting allows for immediate impact and potential tax advantages.
Regardless of the approach, it is essential to ensure the foundation has secure access to the crypto—this means safeguarding wallet credentials, seed phrases, and using trusted custodial solutions. Additionally, all transfers should be supported by clear legal documentation that defines the terms, intended use, and compliance measures, ensuring the foundation can legally receive and manage the digital assets.
Inheritance Implications and Legal Considerations
In Malaysia, cryptocurrency is legally treated as assets and can be inherited like any other asset, but it comes with unique legal and technical challenges. For Muslim Malaysians, inheritance follows Islamic Faraid laws, while non-Muslims are governed by the Distribution Act 1958. Although Malaysia has no estate duty, digital assets must still be declared during probate or administration. A major risk lies in the loss of private keys or wallet access, which can result in the permanent loss of the asset. To prevent this, it’s essential to include crypto in estate plans, ensure secure access to wallet credentials, and seek legal advice to clarify ownership transfer, succession, and the potential role of foundations as beneficiaries.
Conclusion
Cryptocurrency can be inherited and transferred to foundations in Malaysia, provided it aligns with the foundation’s objectives and complies with regulatory requirements. Foundations structured as Companies Limited by Guarantee (CLBGs) can legally hold digital assets, but must follow AML/CFT rules and maintain proper recordkeeping. Crypto can be passed through a will, trust deed, or lifetime gift, but secure access to wallets is crucial to avoid permanent loss. Inheritance laws vary for Muslims (Faraid) and non-Muslims (Distribution Act 1958), and while there’s no estate duty, digital assets must still be declared. Careful planning and legal clarity are essential to ensure crypto assets are properly managed and passed on.
Ensure your digital assets are legally protected and aligned with your legacy goals. Whether you’re considering gifting crypto to a foundation or securing it for your heirs, expert guidance is essential.
Contact us today to create a secure, compliant, and crypto inheritance strategy tailored for Malaysia’s legal landscape.
