Bank Negara Malaysia launches a three-year initiative on real-world asset tokenization with pilots set for 2026 and 2027.

The project targets use cases in supply-chain finance, Islamic finance, and green finance through smart contract-enabled assets.

The central bank’s plan emphasizes a cautious, permissioned approach involving regulated entities to ensure security and compliance.

Bank Negara Malaysia (BNM) has unveiled an ambitious three-year plan to explore the tokenization of real-world assets, marking a significant step in the nation’s digital finance evolution.

Through the newly established Digital Asset Innovation Hub (DAIH) and an Asset Tokenization Industry Working Group (IWG), the central bank aims to develop frameworks and pilot projects across sectors such as supply-chain finance, treasury management, and Islamic finance.

The roadmap begins with proofs of concept in 2026, followed by expanded trials in 2027. BNM’s report highlights that tokenization is the process of converting physical or financial assets into programmable digital tokens.

It could transform the nation’s financial landscape by enabling faster settlements, enhanced transparency, and wider market access. The bank is accepting public and industry feedback until March 1, 2026, to shape future policy decisions and ensure an inclusive approach.

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BNM Sees New Opportunities for Small Investors

In the discussion paper, the BNM defines tokenization as the representation of an asset, such as a deposit, bond, or property, in a digital form on a programmable platform.

Tokens are able to run automated logic through smart contracts, such that the token’s settlement and payments are executed instantaneously.

The benefits are enormous. BNM mentions that tokenization may bring about a dramatic boost in the efficiency of transactions, without the need for pre-funding, and diminish risk associated with the counterparty, since every transaction would be written into a distributed ledger, thereby increasing transparency.

Finally, for small investors and small and medium enterprise businesses, tokenization may provide new avenues for access to financial markets since the concept of fractional ownership comes into play.

The report also highlights the benefits for the thriving Islamic finance sector in Malaysia from tokenization. Such financial instruments as sukuk and murabahah contracts can be optimized for the observance of the Sharia law requirements using smart contracts.

In contrast, green finance tokenization could be tied to measuring the green performance of the contracts, such that payments are only triggered after complying with green standards.

BNM Plans Permissioned Tokenization System

BNM’s approach remains carefully controlled. The proposed plan of the bank for the tokenization ecosystem is a ‘permissioned’ approach where only ‘regulated’ participants, such as licensed financial institutions, are permitted for participation within the tokenization ecosystem.

The central bank focuses on the aspect of neutrality in regard to technology, meaning there will be no preference for a particular blockchain and ledger technology approach being used.

BNM also focuses on the aspect of starting the experiment process using well-known financial assets before proceeding to other financial assets.

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Filed under: Bitcoin - @ November 1, 2025 9:23 am