BNM's Blockchain Initiative Aims to Bridge RM101B SME Financing Gap

Bank Negara Malaysia (BNM) has launched a three-year roadmap to explore and test asset tokenization, aiming to transform the country's financial sector through blockchain technology. The roadmap, announced in November 2025, prioritizes real-world applications such as supply chain financing for small and medium enterprises (SMEs), Shariah-compliant Islamic products, green finance, and 24/7 cross-border payments. The central bank emphasized that tokenization will focus on tangible assets rather than cryptocurrencies, aligning with global trends in regulated digital finance.

Central to the initiative is the establishment of the Digital Asset Innovation Hub, a testing ground for proof-of-concept (POC) projects and live pilots. BNM will collaborate with the Securities Commission (SC) through an Asset Tokenization Industry Working Group (IWG) to address regulatory challenges and identify scalable use cases. The IWG will prioritize projects demonstrating "clear" economic value, such as improving liquidity management or automating Islamic finance transactions.

The roadmap outlines a phased approach: 2026 will focus on POCs and pilot testing, while 2027 will expand into larger trials based on initial findings. Industry stakeholders are invited to submit feedback on potential use cases until March 1, 2026, ensuring alignment with market needs. BNM also plans to study MYR-denominated tokenized deposits and stablecoins, aiming to preserve monetary stability while enabling faster digital settlements.

A key driver of the initiative is addressing Malaysia's RM101 billion SME financing gap. Tokenizing invoices and supply chain assets could enhance credit access for small businesses, reducing reliance on traditional lending models. In Islamic finance, blockchain could automate compliance for Shariah-compliant products, leveraging Malaysia's global leadership in the sector. Cross-border trade settlements and green finance projects are also highlighted, with potential to boost efficiency and sustainability.

BNM's strategy mirrors efforts by Asian regulators like Singapore's Monetary Authority of Singapore (MAS) and Hong Kong's Hong Kong Monetary Authority (HKMA), positioning Malaysia as a regional innovator. The central bank noted that distributed ledger technology (DLT) will only be applied where it adds measurable value, avoiding unnecessary reliance on blockchain for problems solvable via conventional tools like APIs.

The initiative builds on recent regulatory reforms, including a framework allowing approved crypto exchanges to list assets post-security audits. By fostering collaboration between regulators, fintech firms, and traditional institutions, BNM aims to future-proof Malaysia's financial infrastructure while maintaining stability.