Continuing to be among the leaders in global Islamic capital market innovations, the Securities Commission (SC) Malaysia is proposing to expand the landscape of securities tokenization.
Chairman Mohammad Faiz Azmi said: “Given the rapid emergence of innovative products and services, we have seen proposals that challenge the boundaries of our existing regulatory framework.”
With new guidelines being issued to help intermediaries understand and manage associated risks, the SC Malaysia will implement a regulatory sandbox which “offers a controlled environment where market players can experiment with new ideas while we maintain investor protection”.
To this end, the SC Malaysia is inviting proposals for the sandbox – particularly in financial inclusion, retirement solutions, sustainability and Islamic finance – for the first cohort-based approach that will open till April 2025.
“Tokenized solutions that fulfill the necessary criteria may also be tested in the sandbox.”
Further, the SC Malaysia will be collaborating with Malaysia’s sovereign fund manager, Khazanah Nasional, to explore the issuance of tokenized bonds.
“By exploring the use of smart contracts and custodial arrangements, we aim to develop forward-looking policies that support the future of the capital market.”
Mohammad Faiz said the upcoming efforts will be in addition to current approaches to explore the benefits of “AI and blockchain in impact investing, RegTech, digital assets, tokenised securities and innovation in Islamic finance through our FIKRA ACE program”.
The SC Malaysia’s initiative in recent years has led to the current fintech ecosystem that includes equity crowdfunding, P2P financing, digital investment managers, e-services platforms, digital asset exchanges and initial exchange offerings.
