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Malaysia is expanding the use of tokenization across its financial system, with Islamic finance emerging as one area for development. Regulators are testing tokenized securities, deposits, and settlement infrastructure while considering how digital assets can operate within existing Shariah and financial rules.
The push follows Malaysia’s first tokenized sukuk pilot in April, when sovereign wealth fund Khazanah Nasional priced a RM100 million Shariah-compliant issuance in collaboration with the Securities Commission Malaysia. The one-year sukuk forms part of Khazanah’s RM20 billion Sukuk Danum Programme.
Tokenized Sukuk Tests Islamic Capital Markets
The pilot uses distributed ledger technology to create a digital representation of the sukuk while keeping the instrument within Malaysia’s existing capital-market framework. CIMB and Maybank participated alongside institutional investors including KWAP, OCBC Malaysia and Credit Guarantee Corporation Malaysia. Securities Commission Chairman Mohammad Faiz Azmi said:
“The project helps Malaysia set the global benchmark for Islamic finance innovation.”
The SC described the issuance as a controlled pilot intended to test operational and technical workflows while maintaining market integrity and investor protection. The SC said the pilot is intended to help inform future tokenized sukuk issuance and market infrastructure.
BNM Tests Tokenized Payments and Deposits
Bank Negara Malaysia is separately testing several initiatives involving ringgit stablecoins and tokenized deposits through its Digital Asset Innovation Hub. The projects focus on wholesale domestic and cross-border payments, including settlement of tokenized assets.
BNM said some of these tests will examine Shariah-related considerations. The central bank plans to provide greater clarity on ringgit stablecoins and tokenized deposits by the end of 2026.
Islamic Finance Provides a Large Market for Tokenization Pilots
Islamic financing accounts for almost half of financing in Malaysia’s banking system, while Islamic capital markets represent more than 64% of the domestic capital market. Malaysia also accounts for approximately 37% of global sukuk outstanding.
That existing market gives regulators a substantial base for testing how blockchain-based issuance and settlement could fit into Shariah-compliant finance. For now, many of the initiatives remain pilots rather than broad commercial deployments, with regulators using the tests to shape future policy and market infrastructure.
