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1. Introduction
On October 31, 2025, Bank Negara Malaysia (BNM) released the “Discussion Document on Asset Tokenization in Malaysia’s Financial Sector” (hereinafter referred to as the “Discussion Document”), officially launched the action plan for asset tokenization in the financial sector, and announced a roadmap and implementation path.In the current era of RWA craze and chaos, a series of actions such as the discussion document and subsequent solicitation of opinions published by BNM demonstrate Malaysia’s prudent and innovative attitude towards RWA: it must not only lay out the RWA track in advance and use blockchain technology to improve the efficiency of asset circulation, but also strengthen supervision to allow domestic RWA to develop on a compliant track.
The “Discussion Document” not only lays out the plan implementation stages, but also proposes an organizational model to promote the tokenization process and application scenarios with clear economic value. It also emphasizes advancing in a way that strengthens the foundation of monetary and financial stability and financial integrity, which may provide a path for current RWA to reference that integrates innovation and compliance development.This article will interpret the main content of Malaysia’s RWA regulatory layout, trends, and development drivers, and analyze the impact of this move on the RWA industry and practitioners.
2. Interpretation of the core content of the asset tokenization action plan
According to the roadmap announced in the “Discussion Document”, Malaysia’s asset tokenization action will be divided into three stages: 2025 to officially launch the plan, release documents and seek industry feedback; 2026 for the proof of concept and pilot stage; 2027 to expand the scale of the test, summarize the test results, evaluate its impact on law, supervision and technology, and develop a path for large-scale application.In order to successfully complete the plan, Malaysia mainly adopts a collaborative co-creation model in which regulators, industry participants and stakeholders participate in the tokenization application process through its established Digital Asset Innovation Center (DAIH) platform, focusing on the supply chain financing of small and medium-sized enterprises, cross-border trade and Islamic finance. It aims to solve long-term pain points in the Malaysian financial ecosystem, with a view to promoting the exploration and practice of tokenization in the entire financial field in a planned and phased manner in the next three years.
2.1 Regulatory framework under the collaborative co-creation model
In the process of exploring cryptocurrency regulation, Malaysia has gradually formed a dual-track parallel regulatory system with the Securities Commission (SC) and Bank Negara Malaysia (BNM) as the core. SC is responsible for the supervision of the securities attributes of cryptocurrency, and BNM is more responsible for monetary policy and financial stability.In order to maintain a compliance environment while promoting the tokenization process, SC and BNM will use DAIH and the Asset Tokenization Industry Working Group (IWG) as starting points to play the role of regulatory sandboxes.The core function of DAIH is to facilitate two-way learning between regulators and the market. By providing a regulated sandbox environment, high-risk innovations can be safely conducted proof of concept and real-time pilots in a transparent and controllable environment.It not only allows companies to test cutting-edge ideas under specific exemptions, but also allows BNM to closely observe the real risks and regulatory blind spots in the implementation of technology.Under DAIH, BNM and SC will also jointly lead the establishment of the Asset Tokenization Industry Working Group (IWG). The IWG will not only be responsible for coordinating resources to promote pilots, gathering industry strength, and formulating industry standards, but will also exert regulatory responsibilities to assess the potential risks of tokenization to the financial and monetary stability of the Malaysian financial sector, as well as regulatory gaps and legal obstacles, to support the future development of regulatory policies.
2.2 AML/CFT/CPF regulatory requirements without exemptions and exceptions
In the Discussion Paper, BNM’s regulatory stance on anti-money laundering (AML), combating the financing of terrorism (CFT), counter-proliferation financing (CPF) and targeted financial sanctions (TFS) is very clear and strict. Compliance is regarded as an insurmountable bottom line for tokenization exploration.BNM clarifies the mandatory permission access framework in the application scenario precautions section. Only authorized users who have undergone identification and verification (KYC) can access and participate in tokenized financial services.Secondly, BNM requires the identity and responsibilities of participants to be clarified – whether they are financial institutions or technology providers, they must be legally traceable and accountable entities.When financial institutions outsource some services to technology providers, they themselves still need to ensure that their partners comply with AML/CFT regulations and bear the final compliance responsibility. BNM also specifically named the AML/CFT risks posed by stablecoins in the document, stipulating that any form of exploration of tokenized currencies needs to comply with current AML/CFT/CPF and transaction review (TFS) measures.BNM pointed out in the document that tokenized assets with payment functions (including stablecoins) may amplify AML/CFT risks, and all related explorations must strictly comply with current AML/CFT/CPF and transaction review (TFS) measures to maintain financial stability.This means that issuers must demonstrate far beyond conventional monitoring and compliance capabilities, otherwise it will be difficult to obtain approval.
2.3 Tokenization of Islamic Finance
In exploring potential application scenarios, the combination of Islamic finance principles and asset tokenization is an area of strategic significance and unique advantages for Malaysia’s tokenization plan.Islamic financial principles are a set of financial and business practice guidelines based on Shariah. The main difference from the traditional Western financial system is that it not only focuses on the return of capital, but also emphasizes the social justice and moral attributes of economic activities.Introducing tokenization into the field of Islamic finance and utilizing the technical characteristics of blockchain may be able to solve long-standing structural problems in traditional Islamic finance.
The technical limitations of the traditional financial system force Islamic finance to make many compromises in product design, increasing complexity and cost.For example, “Murabahah” (cost plus profit financing) and certain types of “Salam” (forward delivery sales) require that asset ownership and payment must occur at the same time or nearly immediately to avoid suspected interest (Riba) due to time differences.Tokenization can realize the simultaneous and instant exchange of assets and payments.For example, when a commodity token representing physical objects is exchanged with a token representing funds, the transaction will either succeed or fail at the same time, which technically eliminates the possibility of one party delaying delivery and complies with the Shariah’s requirement for immediacy.The “combinability” of smart contracts can also encode the logic of multiple contracts into a series of interconnected smart contracts, which can reduce the operational risks and compliance risks of Islamic financial products with complex contracts due to strict compliance with Shariah conditions.
3. Strategic considerations for RWA layout
This announcement by Bank Negara Malaysia is not a whim, but a key step in the evolution of the entire country’s digital financial strategy.In the early years, the Securities Commission of Malaysia (SC) issued policy documents such as the Capital Markets and Services Act, the Capital Markets and Services (Securities Regulation) (Digital Currency and Digital Tokens) Act, and the Digital Asset Guidelines, which provided clear regulatory boundaries for the entire ecosystem.The “Financial Sector Blueprint 2022-2026” released by BNM in 2022 lists the vision for the development of the financial industry and strategies to achieve goals in the next five years, which also includes promoting market vitality, promoting sustainable development, and continuing to focus on monetary and financial stability. The release of the RWA plan is a response to this blueprint.In the current context of RWA moving from conceptual exploration to substantive system construction and market practice, Malaysia has its own internal and external strategic considerations in deploying RWA in a national, systematic, and phased strategic posture.
3.1 Improve the efficiency of the financial system and national competitiveness
Malaysia’s strategic layout this time stems from its profound insight into the internal and external economic and financial environment.Although Malaysia is the third largest economy in Southeast Asia, its financial market still has room for improvement in settlement efficiency, cross-border payments and financing convenience for small and medium-sized enterprises.Faced with Singapore’s first-mover advantage in the field of digital assets and Hong Kong’s active pursuit, Malaysia is committed to establishing a more efficient and modern financial system and finding its own track.Tokenization can achieve near-real-time settlement and significantly reduce intermediate costs and operational risks.By emphasizing compliance, institutional participation and real asset empowerment, Malaysia aims to create an image of a “robust innovator” to attract traditional financial institutions and long-term capital that are cautious about pure cryptocurrency speculation but are optimistic about the value of the underlying technology of blockchain.In order to clarify its positioning in Asia’s digital financial landscape and enhance financial competitiveness.
3.2 Activate the huge stock of illiquid assets
Malaysia’s economic development contains a large number of illiquid assets, such as SME loans, real estate, infrastructure projects and agricultural commodities (such as palm oil).Through tokenization, these assets can be divided into smaller investment units, significantly lowering the investment threshold and creating an active secondary market, thus revitalizing existing assets and injecting new, lower-cost capital vitality into the real economy.
3.3 Consolidate its leadership position in global Islamic finance
This is Malaysia’s most strategic differentiating advantage.Global Islamic financial assets are huge, but their product structures are often complex.RWA is highly consistent with the principles of Islamic finance that emphasize asset endorsement and risk sharing.Through tokenization, Malaysia can use smart contracts to automate the profit distribution and asset endorsement processes of Islamic bonds (Sukuk), greatly improving transparency and the trust of global investors.On the other hand, it creates an unprecedented, highly liquid secondary market for more than one billion Islamic investors around the world, solving the core pain point of insufficient liquidity in traditional Islamic financial products.And it has spawned new and more segmented Islamic financial products that were previously difficult to implement due to complex operations.
4. Analysis and reflections on RWA regulatory trends in Malaysia
Malaysia has always not regarded cryptocurrencies as legal tender, and in the Discussion Paper, BNM also strictly distinguished between RWA and cryptocurrencies.The “Discussion Paper” repeatedly emphasizes that its scope of exploration is limited to tokenized financial services backed by real-world assets, and draws a clear line between speculative cryptocurrencies (such as Bitcoin) and unendorsed tokens that have no underlying value.This positioning ensures that innovation does not conflict with the fundamental goal of financial stability.In terms of the attitude and purpose of RWA supervision, BNM emphasizes risk-based, compliance first, and adheres to the principle of “same activities, same risks, same regulatory results”: no matter what technology the activity uses, as long as it constitutes a regulated financial behavior (such as payment, securities issuance), relevant institutions must hold corresponding licenses and comply with existing regulations.It also clearly emphasizes the substantial economic value of tokenization and opposes technology for technology’s sake or regulatory arbitrage. The exploration of tokenization must aim to solve real market pain points.
Under this regulatory trend, regulatory compliance will become the ticket for RWA practitioners to enter the Malaysian market in the future.Practitioners involved in key businesses such as stablecoins, asset custody, and trading venues must regard obtaining the corresponding BNM license as the highest priority task.Professional consultants who are proficient in Malaysian financial regulations and tax laws must be introduced during the project design stage.It should become standard operating procedure to assess the tax impact of every step in the asset tokenization process.The pure “disintermediation” narrative is difficult to pass under the Malaysian model, and the cooperation model of collaborative co-creation will also become inevitable. The most feasible path for Web3 technology providers will be to form an alliance with licensed financial institutions (banks, securities firms), with the former providing technology and the latter providing compliance licenses and customer trust.This “technology + license” cooperation model may become the mainstream of the market.
5. Conclusion
The “regulatory-technical-entity” framework constructed in the Malaysian RWA roadmap has paved a compliance channel for RWA from concept proof to large-scale application, and provides a model for promoting the deep integration of blockchain technology and the real economy, and for steady innovation under strict regulatory protection.Showing the future of a regional RWA tokenization center marked by security, efficiency, and compliance.The strict anti-money laundering framework and licensing access model it has established will also provide an important reference for the entire Southeast Asian region on how to balance financial innovation and risk prevention and control.For Web3 practitioners, the key to future success may not lie in being at the forefront of technology, but in deeply understanding regulatory intentions, actively seeking cooperation, and deeply integrating compliance into product design and business strategies.
