Exploring asset tokenisation

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ASSET tokenisation remains in its conceptual phase in Malaysia, with no existing infrastructure but notable interest in exploring the next steps.

In May, the Securities Commission (SC) issued a consultation paper seeking feedback on a proposed regulatory framework for offering and trading tokenised capital market products.

Additionally, Kenanga Investment Bank Bhd (KIBB) and a panel of experts released a white paper in August entitled Project Juara. This paper estimated that Malaysia’s tokenised asset market for regulated products like unit trusts, bonds, and sukuk could reach US$43bil by 2030.

Asset tokenisation involves converting real-world assets (RWAs) such as securities, real estate, or art into digital tokens that can be fractionalised and represented on a blockchain.

Bank Negara Malaysia (BNM) recently released a discussion paper to gather feedback from stakeholders. It emphasises a collaborative approach “to stimulate dialogue, identify opportunities, and co-create a safe and sustainable roadmap for tokenised financial services in Malaysia.”

The central bank highlights that tokenised assets could reach US$16 trillion by 2030, representing approximately 10% of global gross domestic product. It notes increasing global interest in tokenisation as a means to achieve more efficient, transparent, and innovative financial services.

The discussion paper’s framework encourages stakeholders to explore innovative use cases that deliver tangible, real-world economic benefits.

Edmund Yong, managing partner at Celebrus Advisory, highlights that this marks Malaysia’s first clear pathway for tokenised RWAs, offering regulatory coherence compared with earlier approaches.

However, he notes: “The challenge is to ensure inclusivity for public interest.” Tokenisation, as it stands, could widen the digital divide by requiring retail users to possess crypto literacy and technological proficiency while introducing risks many are unprepared for.”

Yong also raises concerns about digital assets’ legal ambiguity, which the discussion paper acknowledges.

He stresses: “Without recognition, perfection and enforcement of rights equivalent to conventional financial instruments, it will create challenges during insolvency and asset recovery.”

To build market confidence, he emphasises the need for a robust legal foundation from the outset, urging regulators to “start with the end in mind and work backwards.”

BNM is also urging those giving feedback to consider the legal status and treatment of tokenised assets and smart contracts, whether certain tokenised assets reflect a legal claim or property right and how this compares with their non-tokenised equivalent as well as in cross-border transactions.

Datuk Wira Ismitz Matthew De Alwis, executive director and chief executive officer (CEO) of Kenanga Investors Bhd, says the collaborative framework being shaped by BNM encourages early engagement between financial institutions, financial technology companies and regulators, ensuring innovation and compliance move in parallel.

“This forward-looking approach enables participants to build confidence and clarity as they experiment with new structures,” he says, pointing out that regulatory coordination between BNM and the SC should be seen as a competitive advantage to develop or innovate responsibly and enable models that can be scaled and replicated across the region.

Among the anticipated areas of exploration under the discussion paper is tokenised money and whether how this can be used for settlement purposes. Yong and Liew Ooi Hann, Halogen Capital Sdn Bhd founder and CEO, are both interested to explore further.

“To put it bluntly, you can’t have tokenised securities/assets without a tokenised settlement currency. Otherwise, when a market participant buys or sells a tokenised security, what do they use to settle on-chain?

“BNM’s exploration of tokenised money through either tokenised deposits or ringgit-denominated stablecoins is critical, otherwise we would be in a place where tradability with the local market becomes limited/fragmented,” Liew points out.

Tokenised money, including tokenised deposits and ringgit stablecoins, is a highly anticipated development. However, they differ significantly in their risk profiles and market applications.

Tokenised deposits, issued by banks and settled through central bank money, may even qualify for depository insurance. In contrast, stablecoins, which compete with traditional bank deposits in some regions, often struggle to meet money’s core attributes.

Despite ongoing discussions, stablecoins lack widespread adoption. Yong notes that the local e-money issuance landscape is unlikely to face significant disruption from tokenisation. Globally, stablecoins are primarily used for investment purposes, such as market trading, rather than retail payments.

Liew highlights the strong alignment between the central bank’s discussion paper and the SC’s consultation paper. With both regulators being key partners in the Asset Tokenisation Industry Working Group, this collaboration creates an ideal environment for integrating the financial services industry and capital markets.

“We have tokenised some of our funds under the SC’s Digital Innovation Fund (Digid) grant programme. Through this initiative, we identified that fund transactions still rely on traditional banking infrastructure. This highlights the importance of transitioning the financial system to on-chain solutions – a development we welcome,” he says.

Digid was established to co-fund innovative technology projects for the domestic capital market.

“BNM’s involvement highlights the importance of coherence, safety and innovation within Malaysia’s financial system. By aligning the monetary and capital-market frameworks, the central bank is laying the groundwork for a trusted, regulated environment where tokenised products can develop responsibly and enhance Malaysia’s standing in tokenised finance,” De Alwis explains.

“For example, a tokenised ringgit could serve as a medium of exchange, backed by tokenised instruments such as money-market or government bonds. This interconnected approach underscores the need for regulators to collaborate closely rather than operate in isolation,” he adds.

Article by FINTAN NG. "Exploring asset tokenisation." The Stars , Saturday Nov 8, 2025, Star Biz7, p. 8.

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Exploring asset tokenisation

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