The Court of Appeal has ruled that cryptocurrency, although not legal tender or an official form of payment in Malaysia, may constitute valid contractual consideration for the repayment of a debt when accepted by the creditor.
A three-member bench comprising Justices Zaini Mazlan, Faizah Jamaludin and Aliza Sulaiman today unanimously dismissed an appeal by a lender seeking to recover RM70,000 in cash despite having accepted 50 units of Litecoin from the borrower in full settlement of the loan.
The dispute arose from a friendly loan between Ong Seow Lee and Lee Ee Foong. In repayment of the loan, Lee transferred 50 Litecoins to Ong, which were then worth approximately RM87,000.
Although Ong accepted the cryptocurrency, he later sued to recover the original RM70,000 in cash, contending that the transfer of Litecoin did not legally discharge the debt.
The magistrates’ court allowed Ong’s claim.
However, the High Court reversed the decision, holding that Ong had accepted the Litecoin as repayment and that cryptocurrency, while not recognised as legal tender in Malaysia, is a valuable digital asset that can constitute valid consideration when both parties agree to its use.
Ong appealed, but the Court of Appeal affirmed the High Court’s decision, holding that the debt had been fully discharged upon his acceptance of the Litecoin and that he was not entitled to recover the RM70,000 after accepting the cryptocurrency as full settlement.
Delivering the judgment, Faizah said the question of whether a debt had been discharged would depend on the parties’ agreement and conduct rather than the form of the asset used as payment.
“A party who knowingly accepts cryptocurrency in settlement cannot later reject that payment solely because it is not legal tender.
“Having accepted the agreed mode of repayment, the creditor cannot retain the cryptocurrency while simultaneously claiming repayment of the same debt in cash, as this would amount to an impermissible double recovery,” she said.
The ruling marks a significant development in Malaysia’s evolving jurisprudence on digital assets.
While the court stopped short of recognising cryptocurrency as legal tender, it affirmed that digital assets may be used to validly discharge contractual obligations where the parties expressly or impliedly agree to that mode of payment.
Eng Khin Hock and Afiqah Abdul Razak appeared for Ong, while Joshua Kevin, Leng Wie Mun and Reuben Ong represented Lee.
Source: Original Article
