24-3-2025 – Malaysia’s central bank has charted a measured course towards financial innovation whilst maintaining its circumspect stance on cryptocurrencies. The central bank’s 2024 report reveals a nuanced approach to digital asset technologies, embracing the transformative potential of tokenisation whilst steadfastly declining to bestow legal tender status upon cryptocurrencies.
Despite a remarkable surge in cryptocurrency trading—which witnessed a 157% uptick to reach £3.06 billion in 2024—the sector remains a modest player in Malaysia’s broader financial landscape. The central bank’s analysis indicates that crypto-assets account for a mere fraction of the nation’s financial ecosystem, comprising less than 1% of banking system deposits and a mere 0.4% of Bursa Malaysia’s market capitalisation.
The regulatory body has expressed particular enthusiasm for the prospects of asset tokenisation within the regulated financial sphere. This technology’s triumvirate of advantages—programmability, composability, and atomicity—has caught the attention of financial strategists at the bank. Of notable interest is the potential for tokenised deposits to function as a reliable on-chain settlement mechanism, working in concert with wholesale Central Bank Digital Currency (CBDC) initiatives.
Looking ahead to 2025, Bank Negara Malaysia anticipates continued growth in the cryptocurrency sector, albeit under watchful regulatory oversight. The bank’s stance reflects a broader regional trend of embracing financial innovation while maintaining robust regulatory frameworks to safeguard economic stability.
Significantly, tokenised deposits issued under the auspices of regulated financial institutions will maintain their status as formal claims against issuing banks, mirroring the established relationship between traditional commercial banks and their depositors. This framework ensures that innovation proceeds within established regulatory boundaries, maintaining financial system integrity whilst fostering technological advancement.