Malaysia’s Central Bank to Explore Asset Tokenization by 2025
1min read Malaysia’s central bank, the Bank Negara Malaysia (BNM), has announced its plans to explore asset tokenization and digital asset technologies in 2025. This initiative is part of the bank's forward-looking financial sector blueprint for 2022-2026, which aims to drive innovation within Malaysia’s financial ecosystem. The bank is particularly interested in the potential of tokenized deposits as a reliable on-chain settlement asset to complement wholesale central bank digital currencies (CBDCs).
BNM is also exploring broader applications of tokenization, including programmable payments, supply chain finance, and treasury management. To guide the industry’s approach to asset tokenization, the bank plans to issue a discussion paper in 2025 outlining high-level principles and use cases. This paper will serve as a framework for the industry to understand and implement tokenization technologies effectively.
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To facilitate innovation, BNM’s Regulatory Sandbox will support live testing of solutions leveraging distributed ledger technology (DLT). This initiative aims to evaluate the feasibility and risks of tokenization within a controlled environment, ensuring that financial stability remains intact. The bank also emphasized the importance of collaboration with the private sector to capitalize on the benefits of tokenization while mitigating associated risks.
Despite the increasing interest in digital assets, Malaysia remains cautious about cryptocurrencies. The central bank has emphasized that crypto assets are not recognized as legal tender and are not a regulated means of payment due to their price volatility and risk factors. The bank’s report indicates that Malaysia’s crypto asset market remains small, representing less than 1% of total banking system deposits as of 2024. However, the bank has taken steps to safeguard investors from the risks linked to crypto by cracking down on foreign exchanges providing crypto assets to Malaysian citizens.
In December 2024, Bybit was ordered to disable its website and mobile apps for operating without proper registration. A similar action was taken against Huobi Global Limited in 2023, forcing the exchange to cease operations in Malaysia. These actions are part of the Securities Commission Malaysia’s (SCM) efforts to protect investors from the risks associated with unregulated crypto exchanges.
Despite regulatory efforts, Malaysia has seen a sharp rise in crypto-related investment scams. A recent report revealed that professionals and senior investors above 60 years old have been primary targets of fraudulent schemes promising high returns from volatile assets. Authorities have urged investors to conduct transactions only through officially registered exchanges to mitigate risks. This cautionary approach reflects the bank’s commitment to ensuring the safety and stability of Malaysia’s financial system while exploring the potential benefits of digital asset technologies.
