The Securities Commission Malaysia (SC) has on Tuesday published a consultation paper to seek public feedback on a proposed framework for tokenized capital market products.

SC said in a statement that tokenized capital market products refer to the digital representation of capital market products using distributed ledger technology (DLT) such as tokenized shares, tokenized bonds and tokenized funds.

It said tokenized capital market products should be differentiated from digital tokens and digital currencies1, and the latter are already subject to a separate existing framework.

It is noted that SC has observed growing interest among capital market participants seeking to offer tokenized capital market products or undertake regulated activities relating to tokenized capital market products.

The proposed framework seeks to enable the broader exploration of DLT in capital markets, particularly use cases that enable programmable assets, fractional ownership, improved transparency and efficiency in record keeping, while ensuring investors’ protection.

The consultation paper is intended to generate discussions and seek public feedback in relation to the requirements as set out under the proposed framework.

The consultation paper seeks feedback on key areas including additional obligations which includes enhanced disclosure requirements, governance controls and record and registry requirements.

Other key areas include technology risk management – compliance with the SC’s Guidelines on Technology Risk Management covering cybersecurity, data privacy, and operational resilience, and additional requirements for licensed persons dealing in tokenized capital market products

According to SC, even though tokenized capital market products leverage DLT, they are still treated the same as conventional capital market products under existing regulations.

Accordingly, the proposed framework is intended to be read in conjunction with existing securities laws and guidelines to ensure consistency in regulatory treatment.

The SC said it welcomes feedback from a wide range of stakeholders, including potential issuers, licensed intermediaries, technology service providers, institutional investors, legal and compliance professionals, and industry associations to ensure a constructive consultation process.

In addition to providing feedback on the consultation paper, the SC also encourages capital market participants interested in offering and/or dealing in tokenized products to consult and discuss their plans with the SC.

The public consultation period is from May 6 – June 16, 2025.

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