Blockchain, smart contracts, and digital signatures: Legal and managerial challenges for business in Malaysia

Abstract

This paper explores the legal, business, and managerial implications of blockchain-based smart contracts and digital signatures within the Malaysian regulatory framework. Drawing on doctrinal legal analysis, comparative legal review, and qualitative case references, the study assesses the compatibility of smart contracts with existing statutes, including the Contracts Act 1950, the Digital Signature Act 1997, and the Electronic Commerce Act 2006. Beyond legal analysis, the research highlights how smart contract adoption impacts business processes, transaction efficiency, corporate governance, and risk management in Malaysian organisations. Benchmarking against Singapore, the European Union, and the United States reveals Malaysia's relative lack of statutory clarity and limited regulatory innovation, which poses challenges for businesses and policymakers alike. The study proposes a three-layer legal integration framework to facilitate smart contract deployment, ensuring legal certainty while enhancing business operational efficiency. It also introduces visual contract prototypes designed to improve comprehension for both legal practitioners and business stakeholders. The paper concludes with policy and managerial recommendations to modernise Malaysia's legal infrastructure, promote regulatory sandboxing, and establish professional standards for digital contracting. These contributions position the study at the intersection of legal scholarship, business innovation, and digital governance, offering insights for corporate leaders, legal professionals, and policymakers navigating Malaysia's evolving digital economy.