In its annual report, Malaysia’s central bank outlined plans to support asset tokenization and explore digital asset technologies without plans to recognize crypto as legal tender.
Malaysia‘s central bank, Bank Negara Malaysia, has rolled out its 2024 annual report, highlighting the growing recognition of tokenization for its potential to drive efficiency in the financial system while still exercising caution around the risks of cryptocurrencies.
In a March 24 research report, the central bank said that in Malaysia, the crypto market “remains active but small compared to the overall size of the domestic financial market.”
“Based on the cumulative net deposit outflow from banks to domestic registered Digital Asset Exchanges, cryptoassets represent less than 1% of the total banking system deposits as at end-2024 and around 0.4% of the market capitalisation of securities listed on Bursa Malaysia.”
Bank Negara Malaysia
Still, the crypto market in Malaysia has been active, the central bank says, adding that in 2024, the total crypto trading volume in the country increased to approximately $3.06 billion, up from $1.19 billion in 2023, reflecting a growth of around 157%.
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New opportunities
The central bank also outlined its continued focus on exploring digital asset technologies, with an emphasis on supporting asset tokenization and the development of a central bank digital currency. In the report, the regulator noted that asset tokenisation within the regulated financial sector is “creating new opportunities by enabling programmability, composability and atomicity.”
“Among others, BNM sees the potential for tokenised deposits to serve as a credible on-chain settlement asset to complement wholesale CBDC. Like traditional commercial bank deposits, tokenised deposits issued by regulated financial institutions are a claim against an issuing bank.”
Bank Negara Malaysia
While BNM recognizes the potential of tokenization to drive efficiency in the financial system, it made it clear that cryptocurrencies would not be recognized as legal tender. Instead, the central bank plans to keep an eye on the crypto space, which it expects will keep growing in 2025.
Read more: Malaysian authorities warn of an uptick in crypto investment fraud
