As we move towards 2027, one of the most significant developments that we are gradually seeing within Malaysia’s fintech market is definitely the convergence of its wider ecosystem.
By convergence, we refer to a phenomenon where payments, remittance, digital assets, capital market products, consumer financing and tokenization are all becoming increasingly connected, forming a wider web that creates new commercial possibilities extending well beyond the individual products and offerings with which many industry players first entered the market.
This convergence is already prompting organizations to reconsider both their existing capabilities and their longer-term ambitions. For those following the fintech market developments and transactions closely, it also helps explain why local and global players are both actively reassessing their positions in Malaysia, exploring strategic partnerships and pursuing the licences, approvals and registrations relevant to their intended businesses and operations.
Of course, as the pace and form of this wider fintech convergence will continue to evolve, its potential legal implications deserve close attention as well. From a legal perspective, product development and regulatory developments progress alongside one another, hence, against this backdrop, this article sets out 3 key trends on the convergence of Malaysia’s fintech ecosystem, focusing on the legal and regulatory developments that warrant attention at board and senior management level, and the legal considerations all organizations should keep in view as they prepare for 2027 and beyond.
Key Trend 1: Tokenized Money Is Bringing Tokenized Payments and Traditional Payments Closer Together
The starting point for one of the most obvious forms of convergence within the fintech scene is definitely tokenized money. Under Bank Negara Malaysia’s (“BNM”) Digital Asset Innovation Hub (“DAIH”), the current focus includes exploring tokenized deposits and ringgit stablecoins, alongside BNM’s wider work on central bank digital currency (“CBDC”), and these developments are definitely bringing the nuanced interaction between digital assets and traditional financial services into the bigger picture.
So far, the initiatives under the DAIH include ringgit stablecoins for business-to-business settlement involving Standard Chartered Bank Malaysia and Capital A, tokenized deposits for payments by Maybank, and tokenized deposits for the settlement of tokenized securities by CIMB.
Of course, at the time of writing this article, these initiatives still remain within a controlled testing environment under the DAIH, and participation does not automatically translate into permission for wider commercial deployment. However, looking at the public consultation process and existing market developments, the broader question is increasingly becoming one of “when”, rather than simply “if”. As the legal market conditions mature, we are definitely expecting clearer frameworks to emerge for the permitted use of different forms of tokenized money, whether CBDC, tokenized deposits or stablecoins, and that future may not be too distant from where we are today.
When this happens, it will naturally form one of the first clear points of wider fintech convergence between digital assets and traditional players within the existing payments market, such as electronic money issuers (“EMIs”), money services businesses (“MSBs”) licensees and merchant acquirers because an EMI could explore connecting its customer interface to permitted tokenized payment arrangements, a remittance provider could assess whether tokenized settlement improves particular payment corridors, while a merchant acquirer could also facilitate acceptance and arrange conversion and settlement into the merchant’s preferred currency, subject to the necessary regulatory permissions.
When this happens, this then also create very different commercial implications across the traditional payment value chain, particularly because the underlying technology requirements could be a complete game changer. Consider, for example, a merchant that receives a stablecoin or tokenized deposit but wants ringgit credited to its bank account instead. Someone must manage acceptance, verify the transaction, arrange redemption or conversion, and complete settlement. While the entire transaction may sound pretty familiar, but the technical arrangements can be fundamentally different as tokenized transactions take place on blockchain infrastructure, so businesses must also consider how tokenized transactions connect with existing banking and payment systems, how wallets and access rights are managed, and how records are reconciled across platforms.
Traditionally, the conventional payments market and the tokenized payments scene have largely operated as two different worlds. Hence, organizations and professionals who can speak both languages and truly understand the interaction between tokenized payments, e-money, remittance, merchant acquiring and the wider payment value chain will become extremely valuable as companies explore opportunities for wider expansion. At the center of this is, without doubt, the different regulatory permissions involved, as issuing electronic money requires BNM approval, remittance and money changing fall within the relevant MSB licensing framework, and merchant acquiring requires registration. Each comes with its own regulatory requirements and nuances, and most crucially, these permissions will still need to be considered alongside the requirements applicable to any proposed tokenized payment arrangement.
Of course, achieving this convergence will require substantial collaboration and investment in capability and regulatory readiness. However, this is a future that simply cannot be ignored, and the earlier a company prepares, the greater its opportunity to position itself.
Key Trend 2: Tokenized Capital Market Products Are Creating Another Front of Fintech Convergence
Another front of fintech convergence that we simply cannot ignore is definitely on the capital markets side. When it comes to capital market products, the relevant regulatory framework falls primarily within the jurisdiction of the Securities Commission Malaysia (“SC”), rather than BNM. If you have been following the fintech developments, you will know that the SC is also advancing initiatives involving tokenized capital market products, and one of the most concrete examples is Khazanah’s RM100 million tokenized sukuk pilot, officially announced in April 2026.
When it comes to the tokenization of capital market products, the long-term opportunities are considerably wider, extending to bonds, sukuk, shares, funds and potentially structures involving other income-generating real-world assets. Of course, the underlying assets may remain familiar capital market products or real-world assets, however, the tokenization process, what each token represents, and how tokens are distributed, minted and burned are the nuances that make all the difference. Different tokenized structures may confer different legal and beneficial rights, and each requires its own legal analysis subject to the requirements applicable to the underlying products.
Earlier this year, we also saw a clear sign of convergence with the release of the SC’s Practice Note on Offering of Broking Services for Digital Assets on 30 January 2026, which permits eligible Capital Market Services Licence (“CMSL”) holders dealing in securities to offer broking services for digital assets, subject to the prescribed requirements. While this relatively short practice note may appear straightforward, its commercial implications cannot be understated because it creates wider opportunities for cooperation between established securities brokers, digital asset exchange (“DAX”) operators and digital asset custodians (“DACs”). Brokers can bring customer relationships, distribution capabilities and experience in investment services, DAX operators can provide trading access and liquidity within their permitted scope, and DACs can provide the necessary custody infrastructure and safeguards. The interaction between these capabilities clearly demonstrates how traditional capital market participants and digital asset players can increasingly complement one another.
Looking at the direction of these developments, we can certainly see a future with even greater convergence. As tokenized capital market products and their supporting structures mature, the opportunities could then slowly extend beyond digital asset broking to the wider offering and distribution of tokenized capital market products, including tokenized stocks. When it happens, CMSL holders, DAX operators and DACs could each explore opportunities within their permitted scope, and e-Services platforms (“eSPs”) may also have a role to play as another distribution channel by facilitating access to capital market products offered by CMSL holders, within the applicable tokenization framework and relevant regulatory requirements.
As the wider tokenization ecosystem develops, we certainly expect 2027 and beyond to bring further regulatory clarity and more mature commercial arrangements. Traditional CMSL holders that have dealt with conventional capital market products for years may increasingly find opportunities to cooperate with businesses experienced in digital asset technology and custody, and vice versa. We may also see traditional players exploring DAX and DAC registrations, while digital asset players consider CMSL licences or eSP registrations, as one side brings familiarity with tokenization technology, while the other brings years of experience in capital market products, distribution and regulatory compliance.
As these capabilities come together around tokenized capital market products, greater convergence between the two groups will naturally follow. This is also why organizations and professionals who can understand and meet both sets of needs stand to be among the greatest beneficiaries to widen their reach and build on their existing capabilities.
Key Trend 3: Consumer Credit and Digital Asset-Backed Financing Are Bringing Another Dimension to Fintech Convergence
Another form of fintech convergence that many may overlook, but which is definitely beginning to take shape, is within consumer credit. Under the Consumer Credit Act 2025, the Consumer Credit Commission or Suruhanjaya Kredit Pengguna (“SKP”) has introduced authorisation and conduct standards for activities within its remit, including buy now, pay later (“BNPL”), factoring and leasing. This has created a much-needed structured regulatory foundation for these consumer credit products.
If permitted tokenized payment arrangements develop further, as discussed above, we can foresee BNPL providers eventually exploring tokenized deposits or stablecoins for settlement, transaction reconciliation or the facilitation of repayments. Much like the convergence involving EMIs, merchant acquirers and remittance providers, this would then connect traditional financial services with tokenized payment infrastructure, and the key difference is that, in this instance, the convergence takes place at the credit end of the ecosystem.
However, unlike the relatively mature regulatory frameworks for e-money, merchant acquiring and remittance, the BNPL authorisation framework is still actively developing. At the time of writing this article, we remain within the six-month transition period that commenced on 1 June 2026, during which existing providers are expected to regularise their positions under the new framework. Therefore, practically, bringing BNPL together with tokenized payment and repayment arrangements will require further effort of regulatory engagement, operational preparation and coordination. Nevertheless, in our view, the direction towards greater convergence is becoming clearer and clearer.
On the other hand, the Consumer Credit Act 2025 also forms part of a wider framework for regulating credit and financing activities, including Islamic credit businesses. Alongside the wider judicial recognition of digital assets as property, including in jurisdictions such as Singapore, we are seeing digital asset-backed financing as another potential wave of convergence that could become part of the financing landscape moving forward.
When it comes to digital asset-backed financing, the underlying commercial concept may remain familiar, but the structure can be considerably different because digital asset-backed financing requires much more than simply identifying a digital asset with market value. Ownership, the creation of effective security, custody, valuation and enforceability must all be addressed. The lender must also understand how the collateral can actually be realised following default, including whether the necessary legal rights and practical access arrangements will remain effective when they are needed. This naturally raises a host of legal questions. Can enforceable security be created and perfected where required? Who controls the assets, and can that control be exercised following default? Does the borrower own the digital assets themselves, or merely hold a contractual claim against a platform or custodian? How reliable is the valuation, and how much could realistically be recovered during market stress? Custody arrangements, competing claims, priority, insolvency treatment and cross-border enforcement all require careful consideration before commercial terms are finalised.
These are, without doubt, difficult legal questions, that require proper legal analysis. Addressing them requires experience in financing structures together with a proper understanding of digital assets, custody arrangements and the technology through which control and transfers are exercised. In our view, convergence on the credit side is increasingly a matter of timing. As consumer credit frameworks mature and permitted tokenized arrangements develop, the opportunities to connect financing, payments and digital assets are likely to become more and more tangible, and this directly creates a valuable opportunity for organizations and professionals who can bring those capabilities together and translate them into workable financing arrangements.
Closing Thoughts
Of course, no one has a crystal ball, but if we pay attention to the direction of the wind, these three developments offer some of the clearest indications of where Malaysia’s fintech ecosystem may be heading. Payments, remittance, custody, broking, credit and capital market products are increasingly coming together, giving familiar financial services an entirely new shape.
The offerings may look much the same, yet the digital assets, technology and legal structures underneath can be fundamentally different, creating fresh gaps to fill, challenges to resolve and opportunities to capture. Therefore, legal practitioners must evolve alongside these developments, while companies will need experienced legal counsel who understand how the different parts connect and can help turn that understanding into a practical path forward.
If you have any questions on fintech regulation, tokenized payments, digital assets, capital market products or consumer credit in Malaysia, please feel free to reach out to the partners in our Technology Practice Group, Ong Johnson and Lo Khai Yi, for a consultation. We have extensive experience advising organizations on technology law, fintech, digital assets and regulatory compliance matters, and would be pleased to assist your team in navigating the legal, regulatory and operational requirements arising from fintech matters.
The Technology Practice Group of Halim Hong & Quek continues to be recognised by leading legal directories and industry benchmarks. Recent accolades include FinTech Law Firm of the Year at the ALB Malaysia Law Awards (2024 and 2025), Law Firm of the Year for Technology, Media and Telecommunications by the In-House Community, FinTech Law Firm of the Year by the Asia Business Law Journal, a Band 2 ranking for FinTech by Chambers and Partners, and a Tier 3 ranking by Legal 500.
About the authors
Ong Johnson
Partner
Head of Technology Practice Group
Fintech, Data Protection,
Technology, Media & Telecommunications (“TMT”),
IP and Competition Law
johnson.ong@hhq.com.my
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Lo Khai Yi
Partner
Co-Head of Technology Practice Group
Technology, Media & Telecommunications (“TMT”), Technology
Acquisition and Outsourcing, Telecommunication Licensing and
Acquisition, Cybersecurity
ky.lo@hhq.com.my.
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