THE biggest case for tokenised finance seems missing from our agenda: Capital mobility.
The real promise of tokenisation is in creating a digital version of assets that’s easier to move, pledge, reuse, and settle across markets. A token that can only be traded on an exchange is inert, whereas a token that functions as collateral changes how capital is mobilised.
Malaysia’s licensed digital asset activity is dominated by trading, with custody and issuance in small supporting roles. Without foundational plumbing, most tokenisation regimes fail because they just switch operational friction around instead of removing it.
Globally, institutional interest has been driven by several catalysts.
First, the approval of US spot Bitcoin ETFs in January 2024 brought crypto into the mainstream with a regulated product that’s familiar to investors. Pension funds, endowments and treasuries could gain exposure without taking direct custody risk.
Second, legislative milestones in the European Union (Markets in Crypto Assets Regulation, 2023), United States (Genius Act, 2025) and major financial centres (Dubai, Hong Kong, Singapore, London) turned regulatory uncertainty into an open path for corporate decision-makers.
Third, large crypto platforms began accepting tokenised money market funds (MMFs) and stablecoins as off-exchange collateral, allowing investors to access trading margin while continuing to earn yield on high-quality assets.
November 2025 became the tipping point when Binance formally accepted BlackRock’s tokenised MMF called BUIDL (following similar moves months earlier by KuCoin and Bybit with UBS’ uMINT fund, and Coinbase with USDC stablecoin).
In effect, the two biggest names in traditional and digital asset management came together to validate the working concept of tokenised collateral.
Collateral is the lifeblood of financial markets. When it moves slowly, capital is trapped; and when it moves quickly and efficiently, liquidity improves with fewer buffers needed, intraday funding costs fall, and cash drag is eliminated.
To explain further, when a financial instrument is tokenised as collateral, it is recognised in both “onchain” and “offchain” systems without unwinding the underlying asset position, benefiting buy-side and sell-side.
This is different from the current practice here of merely issuing tokens and waiting for investors to appear.
Banks aren’t latecomers, but are on the forefront: Societe Generale used its own bond tokens as collateral to borrow DAI stablecoins as early as 2021, while JPMorgan Chase launched a blockchain-based collateral settlement system back in 2023.
Today, the former accepts tokenised collateral for prime services and the latter posts it for CME requirements.
The next catalyst is where the traction truly develops. The US Commodity Futures Trading Commission (covering nearly half of the world’s derivatives market) issued guidance under its Crypto Sprint initiative, pointing to a future where blockchains are treated as next-level collateral management infrastructure.
Eventually, post-trade ecosystems will “shift from holding collateral just-in-case, toward deploying it just-in-time” across platforms, locations, and counterparties.
The New York Stock Exchange and Nasdaq are embedding it into their core operations, followed by the massive repo sector with US$4 trillion in daily volume.
Just last month, The Depository Trust & Clearing Corp piloted live trades of tokenised securities, including collateral transfers, with a full launch in October.
This matters as it’s the beating heart of global securities, pumping quadrillions of dollar transactions annually!
It’s counterpart Euroclear has already forged ahead with major milestones.
Malaysia can decide whether to take this capital-forward route in the next phase of global finance.
The nation’s settlement architecture is not specifically discussed in the Securities Commission Capital Market Masterplan 2026-2030, though local players have started launching tokenised MMFs.
At the asset level, the recent High Court ruling in Lee Ee Foong v Ong Seow Lee on debt repayment has sparked interest in how security interests will be legally perfected, prioritised, and enforced on digital assets; and whether banks can accept them as collateral within regulatory definition and standard commercial documentation.
Financial centres that build interoperable systems will attract institutional capital, as tokenisation “reshapes how money moves”.
Those who don’t, will be stuck with “digital silos” – locally tokenised assets will become harder to access, with limited diversity and valued at steep discounts, weakening firms’ ability to raise funds.
For emerging markets behind the tokenisation curve, it’s a strategic concern. If standards are set elsewhere, these markets will be consigned to “rule-takers” rather than “rule-makers”.
Assets will be tokenised on terms shaped by others, with domestic innovation routed through foreign vendors; and simply approving more licensed exchanges won’t help!
Since capital flows and docks on the rails that clear it fastest, we either build them or pay to use them.
Should our direct competitors succeed, Malaysia may confront a structural disadvantage of having to defend market sustainability without tech sovereignty.
Yet to put things in perspective, digital assets are only 1.6% of stock trading volume and 0.4% of listed securities’ market cap on Bursa Malaysia – still too small to justify sweeping policy changes.
Time will tell if all this is just noise, or if it’s a hidden symptom that capital has long since fled.
Edmund Yong is a director of the Generative AI Association of Malaysia and ambassador of the Global Blockchain Business Council founded in Davos. The views expressed here are the writer’s own.
