Bank Negara Malaysia (BNM) has published a discussion paper outlining potential pathways for asset tokenisation within the country’s financial system, signalling a major step toward integrating blockchain-enabled efficiencies into mainstream finance.
Released last week, the paper highlights how tokenisation, the process of converting physical or financial assets into digital tokens, could improve market efficiency, settlement speed, liquidity and transparency. BNM emphasised that the initiative remains exploratory, with the central bank seeking industry feedback before drafting any regulatory framework.
According to BNM, tokenisation could unlock new opportunities in areas such as supply-chain financing, treasury and payments, Islamic finance, and sustainability-linked financial products. The technology’s ability to automate processes through smart contracts, enable fractional ownership, and support near-instant settlement were identified as key advantages.
One notable application is in SME financing. Citing Malaysia’s RM101 billion SME financing gap, BNM said tokenising invoice receivables and supply-chain assets could allow smaller suppliers to obtain credit more efficiently by streamlining verification and reducing reliance on intermediaries.
Islamic finance, a global sector where Malaysia is a recognised leader, is also expected to benefit. Tokenised sukuk and programmable Shariah-compliant instruments could enhance transparency, improve liquidity and support cross-border participation.
The paper outlines a multi-year roadmap, starting with a series of industry-led proofs of concept in 2026, followed by broader pilots in 2027. BNM will also establish a Digital Asset Innovation Hub and an Asset Tokenisation Industry Working Group to coordinate development, governance and regulatory dialogue.
While recognising the technology’s promise, BNM stressed that adoption must be measured and purposeful. The central bank warned that tokenisation introduces operational, legal and cybersecurity risks, and called for strong governance, interoperability, and permissioned systems in initial phases.
In 2025, BNM launched the Digital Asset Innovation Hub (DAIH) to serve as the
overarching collaborative platform for capacity building, discovery and exploration of
tokenisation use cases.
The DAIH provides an inclusive environment where stakeholders can jointly explore practical applications of tokenisation, while surfacing key insights to inform future policy and regulatory development.
Under the DAIH, BNM has accelerated engagement with key stakeholders, starting with the
establishment of the Asset Tokenisation Industry Working Group (IWG) for banking
institutions. In parallel, BNM is considering mechanisms to facilitate testing activities
in future phases.
These may include the establishment of a controlled environment to support live experimentation of digital asset solutions for real-world use cases
BNM has invited feedback from financial institutions, fintechs, corporates and industry groups, with submissions due by 1 March 2026. The findings from the consultation will shape the next phase of Malaysia’s regulatory approach to tokenised assets