In its latest annual report, Malaysia’s central bank unveiled initiatives aimed at fostering asset tokenization and investigating digital asset technologies, while explicitly stating there will be no recognition of cryptocurrencies as legal tender.
Bank Negara Malaysia has published its 2024 annual report, emphasizing the increasing acknowledgement of tokenization for its capacity to enhance efficiency within the financial framework, while maintaining a cautious stance concerning the risks associated with cryptocurrencies.
According to a research report from March 24, the central bank noted that the cryptocurrency market in Malaysia is “active but small relative to the overall size of the domestic financial market.”
“As of the end of 2024, based on the cumulative net deposit outflow from banks to domestically registered Digital Asset Exchanges, crypto assets account for less than 1% of total deposits in the banking system, and about 0.4% of the market capitalization of securities listed on Bursa Malaysia.”
Bank Negara Malaysia
Despite its size, Malaysia’s cryptocurrency market remains vibrant, with the central bank reporting that the total trading volume in 2024 escalated to roughly $3.06 billion, a significant increase from $1.19 billion in 2023, representing a growth of about 157%.
Emerging prospects
The central bank also reiterated its commitment to exploring digital asset technologies, particularly in terms of promoting asset tokenization and developing a central bank digital currency. The report highlighted that asset tokenization within the regulated financial sphere is “opening new possibilities through programmability, composability, and atomicity.”
“BNM envisions the potential for tokenized deposits to function as a reliable on-chain settlement asset complementing wholesale CBDCs. Similar to conventional commercial bank deposits, tokenized deposits issued by regulated financial organizations represent a claim against the issuing bank.”
Bank Negara Malaysia