Bank Negara Malaysia (BNM) launched the Digital Asset Innovation Hub (DAIH) in June 2025 to test, under supervision, whether tokenised forms of money can solve specific wholesale and cross-border settlement frictions. The regulator engaged more than 30 institutions across banking and non-bank sectors, published a Discussion Paper on Asset Tokenisation in October 2025 and in February 2026 formally onboarded CIMB, Maybank and Standard Chartered Malaysia for live pilots. The frictions under examination are specific. Cross-border wholesale payments require pre-funding of nostro and vostro accounts, which locks liquidity across jurisdictions. Settlement timing mismatches between different systems force banks to hold liquidity buffers that would not be needed under continuous settlement. Reconciliation across fragmented post-trade systems adds cost and operational complexity, particularly in large-value transactions and capital-markets activity. These frictions persist in well-regulated markets and become more acute as cross-border activity grows. Malaysia's domestic infrastructure is not the constraint. Dr Norhana Endut, Assistant Governor at Bank Negara Malaysia, said: "The Malaysian economy is already well served by a highly advanced domestic payment and settlement infrastructure." Malaysia's Real-time Electronic Transfer of Funds and Securities (RENTAS) system processed MYR 73.63 trillion (approximately $16.5 trillion) in 2024, equivalent to 45 times GDP. Following the launch of RENTAS+ in October 2025, domestic interbank settlement operates 24/7. Malaysia has also established six bilateral payment linkages with Singapore, Thailand, Indonesia, Cambodia, China and South Korea, part of 29 such linkages involving ASEAN countries. The DAIH's scope is therefore to determine whether tokenised models add value in places existing systems cannot reach. The three pilots are designed to surface efficiency gains that tokenisation can deliver across the industry, identify regulatory, legal and operational barriers to viability and scalability and build the evidence base for BNM's end-2026 policy position on ringgit stablecoins and tokenised deposits. Three models for tokenised settlement The three banks are testing different tokenised settlement models aligned to different commercial contexts. Maybank is evaluating tokenised deposits for cross-border corporate payments and liquidity efficiency. By anchoring on-chain transactions to existing regulated payment rails, it aims to preserve settlement finality while capturing the gains of near-instant atomic settlement. A live test with Yinson, completed on 25 March 2026, covered atomic settlement with embedded MYR/SGD foreign exchange (FX) conversion outside conventional banking hours. Beyond Yinson, Maybank is examining programmable payment flows from anchor corporates to SME suppliers. Group Chief Digital Officer Kalyani Nair said: "By making these flows predictable and verifiable on-chain, we can improve liquidity for the entire supply chain." CIMB is focused on the capital-markets lifecycle and institutional treasury workflows, evaluating how tokenised deposits and selected stablecoin use cases could fit within existing liquidity and settlement frameworks. Its pilot covers the full lifecycle, including delivery-versus-payment (DvP) mechanics and regulatory reporting. The bank also sees scope for tokenised deposits in programmable payments and intragroup liquidity management, where near real-time transfers could address a clear institutional need. Sylvia Wong, Regional Head of Financial Institutions and Tokenisation at CIMB Group Wholesale Banking, said: "The intent is not to create new instruments but to determine whether digital representations of existing claims can reduce operational friction and increase transparency." Standard Chartered Malaysia is testing a ringgit-denominated stablecoin model for 24/7 wholesale settlement, with Capital A as commercial counterparty, in a separate sandbox. The aim is to test whether this form of tokenised money can yield efficiency gains while keeping know-your-customer (KYC), anti-money laundering (AML) and counter-financing of terrorism (CFT) controls aligned with BNM’s policy objectives. Mak Joon Nien, Chief Executive Officer of Standard Chartered Malaysia, has described the stablecoin as "structured to align with both conventional and, potentially in the future, with Islamic finance principles." The three pilots test different use cases but face the same central regulatory question: how tokenised deposits and ringgit stablecoins are classified and treated within Malaysia's prudential structures. Regulating stablecoins and tokenised deposits BNM's regulatory posture rests on the principle of "same activity, same risk, same regulatory outcome." This forms the basis on which both tokenised deposits and stablecoins are assessed: each instrument is evaluated according to its underlying economic function and risk profile, and treated accordingly within existing prudential structures. The Securities Commission has taken a parallel position on the securities side, stating that tokenised securities are subject to the same underlying regulations applicable to conventional securities, regardless of the technology used. The institutional split, with BNM on tokenised money and the Securities Commission on tokenised securities, reflects the existing division in conventional capital markets and keeps the two regulatory tracks coordinated rather than merged. Tokenised deposits sit within the regulated banking system. They are digital representations of existing bank liabilities and preserve par convertibility, monetary anchors and established prudential frameworks. Endut drew a further distinction within this category: between a digital twin model anchored to regulated rails and a native tokenised deposit model in which the token itself is the primary instrument. The pilots are expected to generate evidence on how each should be treated. Ringgit stablecoins sit outside that perimeter. Endut described them as "a totally new instrument to the Malaysian market," raising distinct questions around reserve backing, redemption, classification, FX policy, consumer protection, liquidity management, AML/CFT and cyber resilience. BNM will draw on international benchmarks such as Singapore, Hong Kong, Japan, the European Union and the United States, but has been clear the approach must suit the Malaysian context. Across both categories, however, the regulatory anchor does not change: ultimate settlement between banks still clears through central bank money. A further set of unresolved questions applies across both categories, including legal enforceability and insolvency treatment of tokenised claims, accounting and prudential classification, liquidity implications under stress, and operational resilience. Data privacy and dispute management also present challenges in more open or permissionless chain environments. The convergence question the pilots leave open The three pilots are currently independent and technically distinct, a consequence of the DAIH's use-case-led design. Endut has acknowledged this will require greater coordination and convergence in subsequent phases to avoid siloed outcomes, with industry-level alignment on standards and design needed to support interoperability and scale while preserving resilience. BNM's standards-led approach draws on domestic precedent. The interoperable DuitNow QR rollout showed that common standards can be achieved across Malaysian financial institutions, and BNM has carried that principle into tokenisation. ISO 20022 alignment and interoperability with existing systems, including RENTAS, are core principles of that framework. Endut said it would be premature to decide whether a common programmable platform is needed, but any such platform would need interoperability with RENTAS, flexibility across use cases, and high standards of resilience and security. The three banks share the principle that tokenisation must integrate with existing infrastructure, but they differ on timing and scope. Maybank’s permissioned design prioritises control, privacy and regulatory compliance in the near term, with broader interoperability seen as a later possibility as standards evolve. CIMB treats RENTAS and Central Depository System (CDS) integration as a design condition, on the basis that capital-markets workflows cannot function separately from existing clearing and settlement infrastructure. Standard Chartered Malaysia has emphasised embedding tokenisation into core banking architecture from the outset. BNM is using the Industry Working Group (IWG) established to support the DAIH to help steer convergence, but Endut said its role is evolving. Initially focused on capacity building and shared learning, the IWG is now shifting towards legal and regulatory consultation while also helping to steer early convergence on design considerations and common standards. More broadly, BNM sees it as a way to accelerate industry readiness through stronger operational preparedness and risk-management practices. Interoperability also has a regional dimension. BNM uses forums such as the Executives’ Meeting of East Asia-Pacific Central Banks to exchange insights on use cases, emerging risks and regulatory approaches. At the same time, Malaysia is a founding member of Project Nexus, which targets cross-border retail payment interlinking, and has participated in BIS Innovation Hub wholesale projects including Project Dunbar, Project Mandala and Project Rialto to enhance back-end settlement by leveraging central bank digital currencies (CBDC) and programmability. Malaysia’s sukuk and Islamic finance advantage Malaysia's bond and sukuk market reached MYR 2.2 trillion (about $492 billion) outstanding at end-2025, up from MYR 2.1 trillion (about $467 billion) the previous year, according to data from the Securities Commission. The Islamic capital market grew 4.4% to MYR 2.7 trillion (about $604 billion) during 2025, with sukuk outstanding growing at an average of 7.1% since 2020. Islamic financing accounts for 48% of total bank financing, while the Islamic capital market accounts for 63.7% of total outstanding sukuk and bonds. Corporate bond and sukuk issuance reached MYR 176.8 billion (about $39.5 billion) in 2025. That scale creates a structural context in which the blockchain properties the three banks describe — auditability, traceability and programmable enforcement — map onto core Shariah governance requirements in ways that could reduce operational complexity and interpretative ambiguity in Islamic financial instruments. Wong described this in terms of ownership clarity: "Digital workflows can help ensure proper contractual sequencing, evidence of ownership and documentation integrity within established Shariah frameworks." CIMB has committed to a tokenised sukuk pilot with Khazanah and the Securities Commission, supporting structuring, execution, custody and lifecycle servicing, and has said it intends over time to issue part of its own future funding in tokenised bond and sukuk formats. Maybank has said it is exploring tokenised sukuk and funds for wealth clients, where fractionalisation could enable broader investor participation. On the Shariah dimension, Nair pointed to traceability as a key mechanism: "By leveraging smart contracts, we can programmatically embed Shariah rules directly into the instrument, ensuring end-to-end transparency and automated compliance throughout the asset's lifecycle." Endut said tokenisation could strengthen principles such as clear ownership (milkiyyah) and asset backing, and expand investor access to retail and cross-border participants through shorter issuance cycles — opportunities that extend beyond sukuk to Islamic financial instruments more broadly. This aligns with BNM’s goal to position Malaysia as a leader in Shariah-compliant digital assets while maintaining financial stability and consumer protection. The policy architecture extends beyond the DAIH: the Securities Commission launched FIKRALab in March 2026 as a parallel testing platform for tokenised Islamic capital-markets products, while its Bond Tokenisation Pilot with Khazanah Nasional uses distributed ledger technology to modernise market infrastructure. BNM has also published a working paper on tokenised forms of money from a Shariah perspective. What will determine whether pilots become policy The three pilots are the evidence base for a policy position BNM has committed to deliver by end-2026 on ringgit stablecoins and tokenised deposits. Whether that evidence is sufficient to move beyond pilots will depend on four conditions. The first is regulatory clarity. BNM will need to resolve how tokenised deposits and ringgit stablecoins are classified and treated, including within the two-tier distinction between digital twin and native tokenised deposit models, and must establish the perimeter conditions under which stablecoins can be issued, held and redeemed. Without this, no pilot outcome can scale into production. The second is demonstrated economic value. The pilots must show tokenised settlement reduces friction in measurable terms, such as lower pre-funding, shorter reconciliation cycles and more efficient liquidity management, without adverse monetary or market effects. The case is strongest where existing infrastructure is most constrained: wholesale large-value flows subject to time-zone mismatches, and capital-markets settlement cycles dependent on batch processing. The third is operational resilience. Tokenised settlement must perform under stress conditions, with clear safeguards for legal enforceability, insolvency treatment, cyber resilience and data privacy, particularly where permissionless or more open chain environments are involved. The fourth is interoperability. Three pilots running on different architectures will not scale unless they can converge around common standards and integrate with existing infrastructure, including RENTAS and CDS. Convergence, either through the IWG or through eventual regulatory guidance, will determine whether the pilots become components of a coherent tokenised ecosystem or remain siloed experiments. On the cross-border track, Malaysia's end-2026 position will sit within a broader regional set that includes BIS Innovation Hub projects and peer central bank programmes. On the Islamic-finance track, the combination of sukuk market scale, dual regulatory architecture and active pilot work gives Malaysia a credible basis to contribute reference standards for Shariah-compliant tokenisation, provided the evidence is strong enough and the framework disciplined enough to support it. No outcome will be determined by the pilots alone. What ultimately matters is whether the evidence generated by the pilots can be effectively translated into a regulatory framework precise enough to resolve the questions the DAIH was created to answer.
