Indirectly as a tax monitoring tool, with non-cash transactions, the possibility of tax avoidance will also be smaller. Why? Non-cash transactions make more money deposited in banks than elsewhere. Thus, tax avoidance is increasingly difficult.
Capital controls may be part of the rationale too:
Malaysia central bank governor wants option of capital controls Monetary policy such as capital control is not that needed for the moment since Malaysia's currency is not at risk, not even on edge to weaken its value. Some Malaysian economist already spoke about this saying that it is "premature" to be an option for now which is totally true.
They want to pull cash out of circulation. It's too easy to smuggle out of the country and dump on the offshore forwards markets, which is exactly what the central bank is afraid of. They are becoming increasingly worried about a financial crisis and the associated effects on the Ringgit.
Financial crisis is unlikely to happen unless Ringgit decline significantly. Putting digital currency on your country is a big challenge knowing it is more volatile than fiat currency, even having a limit like 50% cash and 50% crypto, still Malaysia would not be able to fully regulate it and will face future problems that associates to it. And isn't cryptocurrency are easier to dump? If I were the governor I would really find an alternative solution if they really want to limit cash, everyone can adjust and concrete.