CIMB has moved Malaysia’s tokenisation experiments beyond the digital representation of securities by using tokenised commercial bank deposits to settle MYR 1.38 billion ($343 million) of tokenised sukuk. The pilot coordinated the securities and payment legs on a single ledger, establishing the capability for atomic settlement while interoperability, secondary-market liquidity and the economics of operating digital infrastructure remain to be tested.

CIMB Islamic Bank completed the settlement of MYR 1.38 billion ($343 million) in tokenised sukuk using tokenised deposits on 27 August, extending Malaysia’s experimentation with tokenised capital markets to the cash side of securities settlement.

The tokenised portion formed part of a MYR 1.68 billion ($417 million) sukuk issuance across five-, seven-, 10- and 15-year tenors. Twelve of the 46 investors participated in the tokenised sukuk, with 58% to 91% of each tranche represented digitally.

The transaction builds on the MYR 100 million ($25 million) tokenised sukuk issued by Khazanah Nasional in April in collaboration with the Securities Commission Malaysia (SC). That pilot created a digital representation of the sukuk while retaining conventional fiat settlement.

The pilots are taking place in the world’s largest sukuk market. Malaysia accounts for about 37% of global sukuk outstanding, according to Bank Negara Malaysia (BNM). Domestic sukuk outstanding reached MYR 1.43 trillion ($356 billion) at the end of 2025, according to the SC.

CIMB added a second component by creating tokenised deposits to provide the money used to settle the tokenised securities. The transaction was conducted under BNM’s Digital Asset Innovation Hub (DAIH), where financial institutions are testing applications of programmable and tokenised money within a controlled regulatory environment.

CIMB brings securities and money onto the same ledger

The tokenised sukuk and tokenised deposits settled through a coordinated on-chain process on CIMB Blockchain Connect, the bank’s private permissioned blockchain. Sylvia Wong, Regional Head, Tokenisation, Group Wholesale Banking at CIMB, said keeping both on the same ledger enables the capability for atomic settlement.

The structure allows the sukuk and corresponding payment to transfer together, creating the capability for atomic delivery-versus-payment on-chain. The pilot demonstrates settlement within a controlled single-ledger environment. It does not yet address settlement across different banks, platforms or ledgers.

The tokenised deposit represents commercial bank money backed by cash held at CIMB.

The technology provides the capability for instantaneous settlement, although Wong said institutions may not yet be ready to use it for large transactions. “It’s okay to be instantaneous for MYR 100, but can you imagine if it is instantaneous for MYR 100 million ($25 million)?” she said.

CIMB also sees applications specific to Islamic finance. Ahmad Shahriman Mohamad Shariff, CEO of Group Islamic Banking at CIMB, said tokenisation does not alter the underlying economic or Shariah structure of the sukuk. He said digital assets could also provide greater visibility over the use of proceeds, alongside potential gains in accessibility and settlement speed.

CIMB connects tokenised sukuk with the conventional market

CIMB retained MYR 300 million ($75 million) of the MYR 1.68 billion ($417 million) issuance in conventional form. Some investors were still completing the processes required to hold the digital representation, while CIMB also wanted the two forms to remain fungible over maturities extending to 15 years.

Wong described the ability to move between conventional and tokenised representations over the life of the sukuk as one of the conditions for scaling the model. Restricting investors to a digital representation while the pool of eligible participants remains limited could constrain liquidity.

Novan Amirudin, Group CEO of CIMB Group, said CIMB does not expect tokenised infrastructure to replace traditional financial-market rails. Existing infrastructure already has established legal, operating and trust frameworks, while tokenisation offers potential efficiencies that CIMB wants to capture. The bank therefore expects the two rails to coexist and sees the ability to bridge them as important.

CIMB refers to the digital representation of the conventionally issued sukuk as a “digital twin”. Amirudin said the same underlying instrument can move between conventional and tokenised representations, preserving a bridge between the traditional and digital rails.

The distinction is important because tokenisation does not create a separate capital-market product. The SC defines a tokenised sukuk as a digital representation of the underlying security, provided its fundamental characteristics and attached rights are retained.

The pilot is also testing the operational, legal and custody arrangements required when the instrument is represented and transacted digitally.

The regulatory environment remains transitional. Wong said the sandbox allows CIMB and regulators to establish controlled parameters for activities that may not yet have a generally applicable legal framework. “For now there may not be a widespread open ability to do certain things,” she said, adding that the parameters of the pilot were developed with regulators and the industry.

Tokenised sukuk requires new investor workflows

The 12 investors taking the tokenised sukuk included asset managers, government agencies, insurers and banks.

Investor participation required substantial preparation. Ahmad Shahriman identified this as one of the main achievements of the pilot, with major fund managers, including government-linked investment institutions, establishing processes covering digital custody, wallets and platforms before participating. “It’s a fair amount of work on their side as well,” he said.

Jay Khairil Jeremy Abdullah, CEO of Kumpulan Wang Persaraan (Diperbadankan) (KWAP), Malaysia’s public-sector pension fund, said the institution participated in both the Khazanah and CIMB pilots partly to build institutional capability as the market develops.

“The learning has to come right at the start and not when it matures,” Abdullah said, adding that adoption involves the front, middle and back offices, with capabilities and skills required across the institution.

The experience points to a wider constraint on scaling tokenised markets. Issuing a security on distributed ledger technology does not by itself create a functioning market. Custodians, investors, banks and regulators need operating processes capable of handling the asset throughout its lifecycle.

“The technology is actually the least of the problem,” Wong said. She identified the integration of established processes with new digital infrastructure as the larger challenge. CIMB therefore sought to fit the pilot around investors’ existing workflows instead of requiring them to replace their systems. Moving from the Khazanah pilot to the latest transaction within four months required CIMB to bridge many of those workflows with existing processes.

Tokenised settlement has yet to demonstrate lower costs

CIMB sees lower transaction costs, faster settlement and reduced reconciliation as potential benefits as tokenisation reaches greater scale. These remain expected benefits and the current pilot does not establish those economics.

Asked whether CIMB had compared settlement time, manual processing and costs between the conventional and tokenised portions, Wong said detailed findings were not yet available to share.

The current dual-rail approach also involves additional work. Asked whether operating conventional and tokenised processes meant CIMB was effectively doing everything twice, Wong acknowledged that it does “for now”. CIMB is retaining established workflows while institutions learn to operate the digital rail, limiting the cost savings that can be demonstrated while processes remain duplicated.

Ahmad Shahriman said a fully digital infrastructure with atomic settlement should eventually lower transaction costs by reducing friction in time to market and existing capital-market processes. He characterised the present phase as one of building capability, with later phases expected to explore how those processes themselves can change.

Tokenised sukuk faces interoperability and secondary-market tests

The pilot demonstrates that tokenised securities and tokenised commercial bank money can be coordinated for settlement when both sit on CIMB’s controlled single-ledger infrastructure. Scaling beyond that environment introduces a different problem, as digital assets and money may need to move across infrastructure operated by different banks and market participants.

Keeping both legs on CIMB Blockchain Connect avoids that interoperability challenge for now. Settlement across different blockchains was outside the scope of the pilot.

Eric Badger, Global Head of Sales and Relationship Management for Clearance & Collateral Management, Head of Southeast Asia and Singapore Chief Executive at Bank of New York Mellon, said institutional markets are moving towards an “always-on operating environment”, while the proliferation of digital platforms is creating fragmentation. “How do they connect?” he said, identifying interoperability and consistent regulatory treatment across jurisdictions as key issues.

Malaysia also has to develop the market beyond primary issuance. Abdullah said KWAP wants tokenised instruments to gain greater traction in secondary trading and attract a broader investor base. Institutional participation, he said, should contribute to a deeper and more robust capital market instead of remaining a succession of pilots.

He also cautioned that technology alone would not determine Malaysia’s progress. Development will require talent, public-private collaboration, regulatory and legal frameworks and trust.

CIMB has advanced Malaysia’s tokenisation experiments by bringing a tokenised security and tokenised commercial bank money onto the same settlement infrastructure while retaining a bridge to the conventional market. The pilot demonstrates what can be achieved within a controlled single-ledger environment. Scaling the model will require secondary-market liquidity, interoperability across different infrastructure, broader institutional capability and evidence that tokenisation can reduce costs and operational friction as the traditional and digital rails continue to coexist.