Malaysia’s Central Bank Annual Report 2024

In its annual report, Malaysia’s central bank outlined plans to support asset tokenization and explore digital asset technologies without recognizing crypto as legal tender.

Report Highlights

Malaysia’s central bank, Bank Negara Malaysia, released its 2024 annual report, noting the growing recognition of tokenization’s potential to enhance financial system efficiency while acknowledging the risks associated with cryptocurrencies.

In a March 24 research report, the bank stated that the Malaysian crypto market remains active but is relatively small compared to the overall financial market.

> “Based on the cumulative net deposit outflow from banks to domestic registered Digital Asset Exchanges, cryptoassets represent less than 1% of total banking system deposits as of end-2024 and around 0.4% of the market capitalization of securities listed on Bursa Malaysia.”
> — Bank Negara Malaysia

Despite its size, the Malaysian crypto market saw growth in 2024, with total trading volume increasing to approximately $3.06 billion from $1.19 billion in 2023, marking a growth of around 157%.

New Opportunities

The central bank emphasized its ongoing focus on exploring digital asset technologies, particularly asset tokenization and the potential for a central bank digital currency (CBDC). The report highlighted that asset tokenization is generating new opportunities by enabling programmability, composability, and atomicity.

> “Among others, BNM sees the potential for tokenized deposits to serve as a credible on-chain settlement asset to complement wholesale CBDC. Just like traditional commercial bank deposits, tokenized deposits issued by regulated financial institutions are a claim against an issuing bank.”
> — Bank Negara Malaysia

While BNM acknowledges the potential of tokenization to improve financial system efficiency, it clarified that cryptocurrencies would not be recognized as legal tender. The central bank anticipates continued growth in the crypto space through 2025.

Read more: Malaysian authorities warn of an uptick in crypto investment fraud