Forex trading in Malaysia is legal, but only when done with registered and approved financial institutions. The ruling is tricky, as some say it only applies to physical currency and not online, since the latter involves the trading of theoretical currency. However, to avoid running into legal concerns later on, the easiest way to trade Forex in the country legally is through one of the approved institutions and by maintaining an Islamic account.
The main issue Malaysia has with Forex trading is that they want to have some sovereignty over their currency. Since most Forex trading in the country does not involve their currency, it can be easy to overlook trading using other currencies. Therefore, investing overseas is legal in Malaysia. Additionally, retail Forex trading with an offshore broker can be seen as a foreign investment, and is therefore a legal transaction.
Exercise Due Diligence
There are ways you can trade Forex legally in the country. But the law does strictly prohibit trading with the funds of others and soliciting funds to trade. The laws in the country are written in a way that gives the government some control over what is happening. Thus, you should always stick with the rules and be careful when Forex trading. You can trade in peace but the minute you cross one government official, every little law you have broken will be brought up and you will be severely penalized. The bottom line is that you avoid something that angers the authorities and the government and you will be fine!
Laws and rules are grey in Malaysia. So, there is a risk of getting in trouble with the government if you trade with unauthorized institutions. If you stick to the rules and only trade with licensed brokerages institutions, you will be left alone. Trade solely with your own funds and an overseas broker and you will be living safely within the law.