The Court of Appeal has affirmed that cryptocurrency may constitute valid repayment of a debt where it is accepted by the lender as full settlement, notwithstanding that digital assets are not legal tender in Malaysia. In doing so, the court upheld the High Court’s ruling in a friendly loan dispute involving RM70,000, where the borrower transferred 50 units of Litecoin worth more than the principal which the lender accepted before later attempting to sue for repayment in cash.
The Court of Appeal held that cryptocurrency is a valuable digital asset which can form valid contractual consideration when parties agree, expressly or by conduct, to use it as a mode of payment.
Once the creditor voluntarily accepts such payment in full settlement, the underlying debt is discharged and the creditor cannot both retain the cryptocurrency and pursue the same debt in cash, as this would amount to impermissible double recovery.
Importantly, the court did not treat cryptocurrency as Malaysia’s official currency or a payment method that lenders are obliged to accept. The judgment instead emphasises that the discharge of a debt turns on the parties’ agreement and conduct, not on the form of the asset used to perform the obligation. For lenders and borrowers, this decision underscores the need for clear drafting on permissible modes of repayment, valuation mechanisms and timing of discharge where digital assets are involved, and the importance of documenting any acceptance of crypto as full and final settlement.
