<![CDATA[The institutionalization of Islamic banking in Aceh and Malaysia reflects different approaches to integrating Sharia principles into national financial regulatory systems. Aceh adopts a territorially mandatory Islamic financial regime, while Malaysia maintains the coexistence of Islamic and conventional banking institutions under distinct statutory frameworks. This study examines the legal foundations, regulatory mechanisms, and institutional implications of these arrangements through normative legal research employing statutory, conceptual, and functional comparative approaches. The analysis focuses on Indonesia’s special-autonomy and Islamic banking legislation, Aceh Qanun No. 11 of 2018, and Malaysia’s Islamic Financial Services Act 2013, Financial Services Act 2013, and Central Bank of Malaysia Act 2009. The findings reveal that Aceh’s regulatory framework establishes territorial obligations for Sharia-compliant financial services within Indonesia’s national financial system, whereas Malaysia provides separate licensing and supervisory arrangements for Islamic banking alongside conventional institutions. These differences demonstrate that mandatory regulatory compliance and dual banking coexistence represent distinct legal mechanisms rather than equivalent forms of institutional conversion. The study further identifies legal certainty, regulatory authority, Sharia governance, contractual continuity, and stakeholder protection as essential considerations in assessing both frameworks. Its principal contribution is a comparative legal framework that integrates regulatory compliance with maqasid al-Shariah, particularly the protection of property, contractual justice, and institutional accountability, without assuming that either regulatory model is inherently more effective.]]>
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