BNM Strives to Combine Innovation with Regulation in Advancing Tokenization

Bank Negara Malaysia (BNM) has unveiled a three-year program to investigate the tokenization of real-world assets (RWA), aiming to establish Malaysia as a frontrunner in Southeast Asia’s digital finance sector. The central bank revealed a comprehensive

, which features pilot initiatives scheduled for 2026 and broader testing in 2027, as well as the launch of a Digital Asset Innovation Hub to encourage cooperation between regulators and industry stakeholders. The program is focused on areas like supply-chain finance, Islamic finance, and sustainability-linked assets, with the goal of tackling systemic inefficiencies while maintaining regulatory compliance, according to a .

BNM’s strategy is divided into phases, starting with proof-of-concept and pilot projects in 2026, followed by expanded trials in 2027. The central bank highlighted its careful yet progressive approach, focusing on initiatives that can deliver clear economic value and are technically practical. For example, tokenizing invoices could help close Malaysia’s RM101 billion ($21.5 billion) financing gap for small and medium-sized enterprises (SMEs) by turning invoices into digital tokens, which would speed up and lower the cost of accessing credit, as noted in a

. In the Islamic finance sector, the use of tokenized sukuk and smart contracts could streamline payments and boost liquidity in Malaysia’s RM2.4 trillion market, all while adhering to Shariah law, the TradingView report also mentioned.

Each project will be assessed based on three main criteria: delivering tangible real-world outcomes, confirming that blockchain is the best solution (not just the default), and ensuring technical feasibility within the current infrastructure. BNM made it clear that conventional methods like APIs may still be more suitable for certain problems, reflecting its practical approach, as reported by Coinfomania. This structure is designed to steer clear of speculative ventures and concentrate on projects that support Malaysia’s economic goals, such as increasing supply chain transparency or validating environmental data for green bonds, according to Fintech News.

BNM is inviting participation from banks, fintech companies, and blockchain developers to submit their use-case ideas by March 1, 2026. The Digital Asset Innovation Hub will act as a platform to test these concepts, encouraging innovation while reinforcing Malaysia’s regulatory environment for digital assets. This collaborative strategy is similar to efforts underway in Singapore and Hong Kong, where regulators are also piloting tokenized assets to strengthen financial infrastructure, Fintech News reported.

If the plan succeeds, it could transform Malaysia’s financial sector by making lending, asset management, and trade finance more efficient. For instance, tokenized supply-chain solutions could enhance payment tracking and minimize delays for SMEs, while programmable payment tokens could automate government payouts or escrow services, as Fintech News further explained. The initiative also seeks to advance Malaysia’s leadership in Islamic finance by developing Sharia-compliant blockchain solutions, which could attract international investors interested in ethical finance, according to the TradingView report.

By combining innovation with regulatory oversight, BNM’s approach positions Malaysia as a prudent yet progressive center for regulated tokenized finance. With pilot programs set to launch in 2026, the central bank’s strategy could serve as a model for other countries looking to integrate blockchain into traditional finance without sacrificing stability, Coinfomania noted.