Malaysia’s central bank, Bank Negara Malaysia, has set its sights on asset tokenization and the exploration of digital asset technologies, according to its 2024 annual report. The bank emphasized the potential benefits of tokenization in driving efficiency within the financial system while also expressing caution regarding the risks associated with cryptocurrencies.
Despite the growing activity in the crypto market in Malaysia, the central bank noted that cryptocurrencies represent less than 1% of total banking system deposits and only around 0.4% of the market capitalization of securities listed on Bursa Malaysia. In 2024, the total crypto trading volume in the country surged to approximately $3.06 billion, marking a significant increase from $1.19 billion in 2023, reflecting a growth of around 157%.
Bank Negara Malaysia highlighted its ongoing focus on exploring digital asset technologies, particularly in supporting asset tokenization and the development of a central bank digital currency. The regulator sees asset tokenization within the regulated financial sector as a way to create new opportunities by enabling programmability, composability, and atomicity.
The central bank sees potential for tokenized deposits to serve as a credible on-chain settlement asset to complement wholesale central bank digital currencies. These tokenized deposits, issued by regulated financial institutions, are considered a claim against the issuing bank, similar to traditional commercial bank deposits.
While recognizing the efficiency-driving potential of tokenization, Bank Negara Malaysia made it clear that cryptocurrencies would not be recognized as legal tender. Instead, the central bank plans to monitor the crypto space closely, anticipating further growth in 2025.
The report also mentioned Malaysia’s anti-corruption agency leveraging blockchain and AI to combat fraud, indicating a broader adoption of innovative technologies in the country’s financial sector. Overall, Malaysia’s central bank’s focus on asset tokenization and digital asset technologies signals a forward-looking approach to modernizing the financial system while maintaining a cautious stance towards cryptocurrencies.