Central Bank Spearheads Initiative to Test Tokenization Across Financial Sector
Bank Negara Malaysia has announced a comprehensive three-year roadmap to explore and test asset-tokenization across the financial sector. The central bank will launch proof-of-concept projects and live pilots through its Digital Asset Innovation Hub, established earlier this year.
Industry Working Group to Address Challenges and Foster Knowledge Sharing
The initiative includes the creation of an Asset Tokenization Industry Working Group, co-led by Bank Negara Malaysia and the Securities Commission. The working group will coordinate industry-wide exploration, share knowledge, and identify regulatory and legal challenges facing tokenization implementation.
Focus on Real-World Assets, Not Cryptocurrencies
Bank Negara Malaysia clarified that the roadmap focuses on real-world assets rather than cryptocurrencies. Priority use cases include supply-chain financing to expand SME credit access, tokenized liquidity management for faster settlement, and Islamic finance applications automating Shariah-compliant transactions.
Expanding Use Cases and Exploring Digital Currencies
Additional focus areas encompass programmable payments, green finance initiatives, and 24/7 cross-border trade settlements. The central bank plans to study MYR-denominated tokenized deposits and stablecoins while preserving monetary singleness and enabling efficient digital settlement.
Wholesale central bank digital currency integration will also be explored as part of the broader tokenization framework. The central bank emphasized that tokenization must demonstrate clear economic value rather than serve as purely technological experimentation.
Pragmatic Approach to Distributed Ledger Technology
Bank Negara Malaysia stated that distributed ledger technology should be employed exclusively where it creates demonstrable value. The bank noted many issues may be better resolved using APIs rather than blockchain technology.
Phased Implementation and Industry Feedback
The initiative begins with conventional financial instruments, including bonds, loans, and deposits, before expanding to more complex assets. Future tokenization may extend to real estate deeds and machinery, though current participation is limited to licensed and regulated financial institutions.
Industry feedback on the discussion paper remains open until March 1, 2026. Testing parameters have been clearly outlined, with proof-of-concept and pilot studies scheduled for 2026 before scope expansion the following year.
Malaysia Joins Regional Peers in Tokenization Pilots
Malaysia aims to join regional regulators like Singapore's MAS and Hong Kong's HKMA in piloting asset tokenization to modernize financial infrastructure. Singapore's Project Guardian includes over 40 financial institutions running tokenized asset pilots, while Hong Kong's Project Ensemble builds wholesale settlement infrastructure for tokenized transactions.