In its annual report, the Malaysian central bank outlined plans to support asset tokenization and explore digital asset technology without a plan to recognize Crypto as fiat currency.
Negara Malaysia Bank, the central bank of Malaysia, has rolled out its 2024 annual report, paying attention to cryptocurrency risks, highlighting the growing awareness of tokenization for its potential to drive the efficiency of the financial system.
In a March 24 research report, the central bank said in Malaysia, the crypto market “remains more active than the overall size of domestic financial markets, but smaller.”
“Based on the cumulative net deposit efflux from banks to domestic registered digital asset exchanges, crypto assets represent less than 1% of total banking system deposits at the end of 2024 and approximately 0.4% of the market capitalization of securities listed in Bursa Malaysia.”
Bank Negara Malaysia
Still, the Malaysian crypto market is active, the central bank added that in 2024, the domestic total crypto trading volume rose to around $3.06 billion from $1.19 billion in 2023, reflecting a growth of around 157%.
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New opportunities
The central bank also outlined its continuous focus on researching digital asset technologies, with an emphasis on tokenizing assets and supporting the development of central banks’ digital currency. In the report, the regulator said asset tokenization within the regulated financial sector “creates new opportunities by enabling programmability, complexity and atomicity.”
“In particular, BNM considers the possibility that tokenized deposits could serve as reliable on-chain settlement assets that complement wholesale CBDCs. As with traditional commercial bank deposits, symbolic deposits issued by regulated financial institutions are claims against the issuing bank.”
Bank Negara Malaysia
BNM recognizes the possibility of tokenization to drive the efficiency of the financial system, but has revealed that cryptocurrencies are not recognized as fiat currency. Instead, the central bank plans to look at the crypto space that is expected to continue growing in 2025.
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