The Missing Shield: Addressing Jurisprudential Lag and Structural Misalignment in Malaysia’s Islamic Fintech Regulatory Framework

Malaysia is a global leader in Islamic finance, supported by a sophisticated Shariah governance framework and robust regulatory institutions. However, the rapid rise of Islamic fintech has revealed structural tensions within a regulatory architecture originally designed for centralized financial institutions rather than decentralized, technology-driven platforms. This article argues that the issue is not a complete absence of regulation, but a form of regulatory misalignment in which statutory design, supervisory jurisdiction, and Shariah governance mechanisms struggle to keep pace with fintech's speed and functional diversity. Through doctrinal analysis of the Islamic Financial Services Act 2013 and relevant regulatory frameworks, this study identifies gaps in Shariah compliance enforcement, jurisdictional coordination, and consumer religious-risk protection. It reconceptualises the notion of a "legal vacuum" as a jurisprudential-operational gap rather than legislative absence. In response, the paper proposes a structured reform comprising four calibrated models: a standalone Islamic Fintech Act, targeted IFSA amendments, a federal harmonisation mechanism for Shariah fintech governance, and a dedicated consumer protection charter. By translating jurisprudential critique into actionable institutional pathways, this study contributes to the evolving discourse on Islamic fintech regulation. It argues that sustainable leadership in Islamic fintech requires regulatory coherence in ensuring that technological innovation remains aligned with constitutional realities and the higher objectives of Maqasid al-Shariah.

Islamic Fintech, Shariah Governance, Consumer Protection, Regulatory Framework, Malaysia.

1. Al-Amine, M. A.-B. (2019). Crowdfunding in Islamic Finance: Ensuring proper Sharīʿah oversight. In Umar, O. & Ali, N.S. (2019). Fintech in Islamic Finance: Theory and Practice. London: Routledge. [Google Scholar] [Crossref]

2. Asma Hakimah Ab Halim, Ruzian Markom & Wan Amir Azlan Wan Haniff (2025). The role of the financial metaverse and its compliance with Shariah principles.Leveraging Advanced Technologies: Business Model Innovation and the Future, 551-557 [Google Scholar] [Crossref]

3. Barafwala, N. R., & Mehta, A. S. (2023). Shariah-Compliant Finance: An Analysis of the Islamic Financial Services Industry. International Journal of Management, Public Policy and Research, 2(4), 88–94. [Google Scholar] [Crossref]

4. Borhan, N. A., Markom, R., & Mohd Ariff, M. I. A. (2025). Peranan Penasihat Robo dalam Sistem Kewangan Islam. Akademika, 95(1), 409–424. [Google Scholar] [Crossref]

5. Fathorrozi, A. & Hamzah, M. (2024). Kepatuhan Syariah Pada Fintech Lending Syariah: Analisis Akad dan Implementasinya. Qawãnïn Journal of Economic Syaria Law, 8(1), 84–101. [Google Scholar] [Crossref]

6. Fadila, N., Andaru, F. M., & Aryani, Y. A. (2023). Can the Sharia Finance Industry Still Adopt New Innovations? Journal of Economics, Finance and Management Studies. [Google Scholar] [Crossref]

7. Global Islamic Fintech Report. (2024). Global Finance & Technology Network Limited. Singapore: Global [Google Scholar] [Crossref]

8. Jam'an, A., Asdar, A., & Nugraha, D. (2024). Shariah Fintech to Support Ethical and Sustainable Economic Development. ICBAE 2024, August 14-15, Purwokerto, Indonesia. [Google Scholar] [Crossref]

9. Laldin, M. A., & Djafri, F. (2019). Islamic Finance in The Digital World: Opportunities and Challenges (Kewangan Islam dalam Dunia Digital: Peluang dan Cabaran). 16(3), 283–299. https://doi.org/10.31436/JIA.V16I3.853 [Google Scholar] [Crossref]

10. Lembaga Zakat Selangor. (2021). Zakat Ke Atas Aset Mata Wang Kripto. https://www.zakatselangor.com.my/info-zakat/zakat-kewajipan-berzakat/zakatkripto [Google Scholar] [Crossref]

11. Malaysia Fintech Report (2024). Malaysia Fintech Report 2024. Kuala Lumpur: Fintech Malaysia. [Google Scholar] [Crossref]

12. Nur Alia A. Rahman, Ruzian Markom, Hizri Hasshan (2026). The Legal Status of Non-Fungible Tokens in the Islamic Financial System, 10(1), [Google Scholar] [Crossref]

13. Razak, M. I. A., Dali, N. A. M., Dhillon, G., & Manaf, A. W. A. (2021). Fintech in Malaysia: An appraisal of the need for Shariah-compliant regulation. Pertanika Journal of Social Sciences and Humanities, 28(4), 3223–3233. https://doi.org/10.47836/PJSSH.28.4.40 [Google Scholar] [Crossref]

14. Sheela, P., Kusuma, K., Panigrahi, R. R., & Shaikh, Z. H. (2024). Fintech and Islamic Banking: A Systematic View and Future Research Agenda. In M. Irfan, S. Kadry, M. Sharif, & H. Khan (Eds.), Fintech Applications in Islamic Finance: AI, Machine Learning, and Blockchain Techniques. IGI Global Scientific Publishing. [Google Scholar] [Crossref]

15. Slimani, I., Touil, B. E., & Sari, A. (2024a). The evolution of Islamic fintech in Malaysia. International Journal of Economic Perspectives, 18(2), 401–416. [Google Scholar] [Crossref]

16. Triyanta, A., & Hassan, R. (2024). The Connection Between Robust Legal Instruments and The Exceptional Performance of The Islamic Banking Industry. Journal of Governance and Regulation, 13(2 (special issue)), 267–274. [Google Scholar] [Crossref]

17. Vakkapatla, V. (2024). Technological transformation of transactions with the rise of FINTECH. World Journal of Advanced Research and Reviews, 24(1), 2053–2059. [Google Scholar] [Crossref]

• Conflict of Law in the Safeguarding of Malaysian Intangible Cultural Heritage: A Way Forward
• Alternative Dispute Resolution in India: A Brief Overview Justice Delayed is Justice Denied. - William E. Gladstone
• The Role of Museums in Safeguarding Cultural Heritage Rights: Balancing Access and Repatriation
• An Evaluation of the Universal Declaration of Human Rights' Significance and Application in Nigeria
• The Role of International Law in Shaping National Immigration Policies.