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Benefits of tokenisation yet to be realised
Aug 25, 2025
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4 min read
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Underpinning tokenisation is blockchain technology, which can increase the operational efficiency of financial services firms. Take unit trust funds, for example.
An industry player who did not want to be named says after securities like bonds and shares are bought in large aggregated transactions with investors' money, the values of those securities are broken down into "units" and assigned to each investor.
The process involves not just the fund manager and trustee, but also what is known as a securities services company - for accounting exercises - and transfer agent, for maintaining the register of unit holders, showing how many units of a fund each investor holds.
The industry player says the work of the securities services company and transfer agent can be automated with a smart contract feature enabled by the blockchain technology, and the cost saving can be passed on to Investors of the unit trust fund.
In fact, such a trend is already happening globally. CK Ong, chief operating officer of SBI Digital Markets, says some of his clients lowered the overall fees of their unit trust funds and bonds by five to 10 basis points by "putting some transfer agent functions on-chain (on the blockchain)".
Other key benefits are market access and liquidity. When a unit trust fund or Individual bond paper is tokenised Into a much smaller size - say, RM10 per token - they can be traded by more people. If these digital tokens are allowed to be listed on digital asset exchanges (DAXs), they can also be easily traded by a larger pool of investors.
Liquidity of these securities and investment instruments could improve. too, when more investors are able to access them. But Ong says transaction volumes of tokenised assets globally have yet to pick up meaningfully this year.
Industry players also point out that cost saving from asset tokenisation isn't expected to happen soon in Malaysia as the regulator is leaning towards the "digital twin" model as a start.
Put simply, a digital twin model means tokenised asset providers create a digital record on the blockchain, which is cryptographically secured, on top of the off-chain (off the blockchain) record. Both on-chain and off-chain records have to be consistent.
Adopting a digital twin model means that even if a tokenised asset provider can automate certain record-keeping processes with blockchain, they are still required to maintain various records in the way they have been done traditionally and in compliance with the existing rules and law.
Cost saving will happen when the regulations allow the "native token" model where information is allowed to be recorded on the blockchain or distributed ledger without an off-chain equivalent. but it will take time.
According to a public consultation paper by the Securities Commission Malaysia (SC) titled "Proposed regulatory framework for offering and dealing in tokenised capital market products", the regulator "has adopted a phased approach in facilitating the offering and dealing in tokenised capital market products".
It mentions that "given the increased complexity and risk associated with native tokens, further time and consideration are needed to develop an appropriate regulatory framework for native tokens"
Suhanna Husein, co-founder and CEO of CoKeeps, the first digital asset custodian licensed by the SC, says it is pertinent for the country to gradually move towards adopting native tokens.
"The digital twin model has been the preferred first step in many jurisdictions because it fits within existing legislation and processes, and matches the technology risk appetite of the stakeholders.
"That said, there should be clear objectives and milestones for asset tokenisation, with the ultimate aim of moving towards native tokens. Only then can we unlock the full benefits of [asset tokenisation as] highlighted in various studies," she says.
Article by Kuek Ser Kwang Zhe. "Benefits of tokenisation yet to be realised." The Edge Malaysia, August 25, 2025, Wealth, p. 7.
Disclaimer
The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile. The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, Bond and Sukuk Information Platform Sdn Bhd (“the Company”) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
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