Bank Negara Malaysia (BNM) has issued a Discussion Paper on Asset Tokenisation in the Malaysian Financial Sector, seeking industry feedback on how digital versions of real-world and financial assets could reshape financial services in the country.
BNM defines tokenisation as the conversion of physical or traditional financial assets into digital tokens that can be issued, traded and settled on programmable platforms. These tokens enable features such as instant (atomic) settlement, programmability via smart contracts, and composability, allowing different financial instruments to interact seamlessly.
According to the central bank, these features have the potential to significantly improve efficiency, transparency and accessibility across Malaysia’s financial system. By embedding rules directly into digital assets, financial institutions could speed up settlement, reduce operational costs and offer more inclusive financing solutions.
BNM stressed that the initiative is exploratory and does not introduce new regulations at this stage. Instead, the discussion paper invites feedback from banks, fintech firms and technology providers to identify practical use cases that deliver real economic value.
Learning from Regional Peers
BNM noted that other financial hubs are already experimenting with similar initiatives. Singapore’s Project Guardian involves more than 40 institutions testing tokenised assets, while Hong Kong’s Project Ensemble is developing wholesale settlement infrastructure. Malaysia’s approach mirrors these efforts, prioritising collaboration and experimentation before policy decisions are made.
Why BNM Is Exploring Tokenisation
BNM sees tokenisation as a way to modernise financial infrastructure. Traditional settlement processes can take days and require large liquidity buffers. Tokenisation could shorten settlement cycles, lower counterparty risk and free up capital. The use of distributed ledgers also enhances traceability, auditability and trust.
Key Areas of Exploration
The discussion paper highlights several areas where tokenisation could deliver tangible benefits:
-
Supply chain financing: Tokenised invoice receivables could help SMEs access cheaper financing by leveraging the credit strength of large buyers, addressing a financing gap estimated at over RM101 billion.
-
Treasury and liquidity management: Atomic settlement and programmable delivery-versus-payment processes could reduce pre-funding needs and improve capital efficiency.
-
Islamic finance: Tokenisation could support Shariah-compliant structures such as murabahah and ijarah, while boosting liquidity in sukuk and Islamic investment products.
-
Sustainability finance: Tokenised green and sustainability-linked instruments could embed verified impact data, reducing greenwashing and improving investor confidence.
-
Programmable payment tokens: These could automate payments for government aid, escrow arrangements and milestone-based contracts.
-
Trade and cross-border payments: Tokenised assets could enable real-time, 24/7 settlement, improving liquidity for exporters and importers.
While real-world assets like property and machinery are acknowledged as future possibilities, BNM said early efforts will focus on familiar financial instruments within existing regulatory frameworks.
Safeguards and Governance
BNM outlined six key design considerations to ensure safety and trust. Participation will be limited to licensed financial institutions, with strong KYC and anti-money laundering controls in permissioned environments. The central bank also emphasised maintaining the “singleness of money”, ensuring that tokenised money remains fully interchangeable with traditional forms.
BNM remains technology-neutral, focusing instead on resilience, security and interoperability.
Next Steps
The Digital Asset Innovation Hub (DAIH) will serve as a sandbox for pilots, supported by an Asset Tokenisation Industry Working Group to guide policy discussions. The roadmap spans 2025 to 2027, progressing from concept testing to live pilots, with regulatory decisions informed by real-world outcomes.
BNM has invited public feedback on the discussion paper, with submissions due by 1 March 2026.
Overall, the initiative signals BNM’s intent to prepare Malaysia’s financial system for a digital future—one that balances innovation with stability, inclusiveness and real economic value.
