CIMB Group Holdings Bhd has completed a pilot to test the settlement of tokenised sukuk using tokenised deposits in a controlled environment, paving the way for broader applications enabled by blockchain technology.
These potential applications include instant, or atomic, settlement for cross-border transactions, as well as the democratisation of investment assets — such as enabling bonds to be sold in smaller amounts that retail investors can more easily afford.
The pilot was carried out through CIMB Islamic Bank Bhd in connection with a RM1.68 billion issuance under CIMB Islamic’s existing RM10 billion senior sukuk wakalah programme, with tenors of five, seven, 10 and 15 years.
Of the total issuance, RM1.38 billion was issued in tokenised form and subscribed to by 12 institutional investors, while the remaining RM300 million was issued as a traditional sukuk. The order book was covered 1.73 times, with the pricing date set at Aug 19 and settlement completed on Aug 27, according to Sylvia Wong, regional head of tokenisation at CIMB Group Wholesale Banking.
The key distinction between CIMB’s pilot and an earlier pilot conducted by Khazanah Nasional Bhd lies in how settlement occurred. CIMB’s pilot involved settling both the tokenised sukuk and tokenised deposits, meaning the financial asset and the cash were both settled on-chain — though the tokens mirror legal records that continue to exist within the traditional system.
A tokenised deposit refers to a bank deposit recorded as a digital token on a blockchain, effectively representing commercial bank money in digital form.
In contrast, Khazanah’s tokenised sukuk, which settled in mid-May, was paid for using fiat currency, or the ringgit, through traditional payment rails rather than blockchain. In that case, only the financial asset was settled on-chain, while the cash portion moved through conventional channels.
“For our pilot, we created tokenised deposits to settle the tokenised sukuk, so both of these settlements are on the blockchain,” Wong said, adding that the blockchain used for the settlement is called CIMB Blockchain Connect.
The digital asset custodian (DAC) involved in the pilot — the entity responsible for safeguarding clients’ tokenised assets — is not among the two DACs currently registered with the Securities Commission Malaysia (SC).
“For this pilot, we cleared with the SC that a DAC licence is not required. We just need the ability to custodise these assets and the deposits,” Wong said during a press conference.
What It Means for Ordinary People
Wong explained that the central feature of the pilot is atomic settlement, where a buyer’s money and a seller’s asset change hands at exactly the same instant.
She noted, however, that this concept holds limited relevance for individual consumers, who can already transfer and settle smaller sums instantly through existing payment infrastructure such as DuitNow.
Settlement remains far from instantaneous in the institutional market, though. When large sums of money are sent overseas — for purposes such as funding a child’s education — the process can take several days as funds move through traditional channels involving multiple banks.
“Now, with blockchain technology, if everyone is on the same blockchain, it happens literally instantaneously,” she said.
The pilot nonetheless follows a “digital twin” approach, meaning the on-chain token mirrors traditional legal records rather than replacing them entirely; the process is therefore not conducted wholly on-chain.
“The technological capability [for atomic settlement] is there, but are we ready to go [completely] instantaneous? We may not be ready just yet. Imagine, it is fine if it is RM100, but it is a different story if the amount is RM100 million, for a bank. Banks are looking for less friction, but not frictionless for now,” she said.
Adopting a digital twin model means banks such as CIMB are investing in testing tokenised solutions through blockchain technology, even as traditional legal records and processes continue to run in parallel — meaning cost savings have yet to materialise. However, as more processes shift on-chain in the years ahead, banking operations could become faster and more efficient, while tokenisation could also help democratise asset classes by making them more accessible to retail investors.
Making Financial Markets More Efficient
According to a press release, the pilot was carried out as part of CIMB’s participation in Bank Negara Malaysia’s Digital Asset Innovation Hub, which offers a controlled environment for financial institutions to test new digital asset applications. CIMB has also been engaging with the SC on the broader development of tokenised capital market products.
The completion of the pilot was announced at Menara CIMB in Kuala Lumpur, at an event attended by Finance Minister II Senator Datuk Seri Amir Hamzah Azizan.
Amir Hamzah said the pilot demonstrates how Malaysia can build on its established strengths in Islamic finance and capital markets as financial infrastructure becomes increasingly digital.
“Malaysia has developed deep capabilities in both Islamic finance and the capital markets. The next step is to ensure that these strengths continue to evolve alongside changes in technology and the way financial transactions are conducted. This pilot is important because it moves tokenisation beyond theory and tests how digital financial assets and commercial bank money can work together in a controlled environment. The objective is not digitalisation for its own sake, but to explore whether technology can make financial markets more efficient, transparent and connected while preserving strong standards of governance, investor protection and shariah compliance,” he said.
Novan Amirudin, group chief executive officer of CIMB Group, said the pilot provided the bank and regulators with practical insights into the operational, legal and regulatory requirements involved in tokenised financial transactions.
“This pilot allows us to test how tokenised financial assets can operate alongside existing market infrastructure and, importantly, how tokenised deposits can be used for settlement. The potential benefits are practical. Greater automation and faster settlement could reduce friction in financial transactions, improve liquidity management and increase capital efficiency. The experience gained from this pilot will help us assess how these capabilities can be developed further in Malaysia and, potentially, across regional and cross-border applications,” he said.
Beyond Technology: Partnership and Integration
During the press conference, Ahmad Shahriman Mohamad Shariff, CEO of Group Islamic Banking, CIMB, said an equally significant achievement of the pilot was persuading major fund management firms and government agencies to build the infrastructure required to settle CIMB’s tokenised sukuk using tokenised deposits.
“If they were to choose, it is easier for them to settle [with cash] in fiat [currency], as that’s business as usual for them. But in order to join the pilot, they have to set up their own infrastructure. While we are trying to encourage people to explore [tokenisation] and onboard them, there’s a fair amount of work on their side [to be completed] as well. And we are very glad and happy to see the responses. It was well-received,” he said.
