SS #74 - Malaysia Propels Stablecoin Pilots for Wholesale Banking

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Bank Negara Malaysia (BNM) has officially launched three pilot initiatives to test ringgit-pegged stablecoins and tokenized deposits, marking a significant move toward integrating blockchain technology into the national financial system. In collaboration with major institutions, the trials will focus on enhancing B2B payments, enabling 24/7 cross-border settlements, and clearing tokenized real-world assets. A defining feature of this regulatory sandbox is its specific focus on ensuring these digital asset frameworks align with Islamic finance principles, tailoring the innovation to Malaysia’s unique market requirements.

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In Today's Edition:

• Headline: Malaysia Propels Stablecoin Pilots for Wholesale Banking

• Quick Bites: Hong Kong Ready to Issue First Stablecoin Licenses in March

• Yield of the Week: 43.2% APY on Yearn

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HEADLINE

State of play: Bank Negara Malaysia (BNM) has officially onboarded three pilot initiatives to test ringgit-pegged stablecoins and tokenized deposits, signaling a major push toward integrating blockchain into the national financial system.

• The pilots involve major players including Standard Chartered, Maybank, CIMB, and Capital A (AirAsia).

• The testing targets B2B payments, 24/7 cross-border settlements, and the clearing of tokenized real-world assets (RWAs).

• Unique to Malaysia's market, the sandbox will specifically evaluate how these digital assets align with Islamic finance principles.

What’s Next: The central bank will move toward a formal regulatory framework by late 2026, likely transitioning these pilot technologies into a permanent wholesale CBDC infrastructure. We expect participating corporations like AirAsia to begin integrating these stablecoin settlements into their live global supply chains shortly after.

Why it Matters: This shift from speculative retail crypto to bank-led tokenized deposits signals a massive leap in institutional legitimacy for blockchain in Southeast Asia. By prioritizing Shariah-compliant digital assets, Malaysia is effectively positioning itself as the primary gateway for the global Islamic digital economy.

Our Take: Malaysia is wisely choosing utility over hype by focusing on wholesale liquidity, which offers a massive opportunity for fintechs building Shariah-compliant middleware. While the reliance on "tokenized deposits" may risk creating fragmented banking silos, the move successfully balances high-tech efficiency with traditional regulatory stability.

QUICK BITES

• Tether makes 'strategic investment' into LayerZero Labs.

• Hong Kong ready to issue first stablecoin licenses in March.

• Stripe adds x402 integration for USDC agent payments on Base.

• Bo Hines says Tether could become 'top 10 T-bill buyer' this year.

• Agant registers with U.K. FCA ahead of British pound stablecoin debut.

• World Liberty Financial to roll out foreign exchange remittance service.

• USAD stablecoin launches on Aleo Layer 1 mainnet via Paxos Labs partnership.

• Gate CEO and founder Lin Han says banks have lost the war against stablecoins.

• Circle Ventures invests in edgeX ahead of token launch, plans USDC on EDGE Chain.

• Aave Labs proposes sending 100% of protocol revenue to DAO in exchange for funding.

YIELD OF THE WEEK

Yearn vbUSDC: 43.2% APY

• The vbUSDC vault on the Katana zk-rollup chain utilizes a multi-strategy allocator model, distributing stablecoin assets across six different DeFi strategies to balance risk and yield.

• Total vault liquidity is primarily concentrated in Morpho-based compounders (Gauntlet, Steakhouse, and Yearn), with current strategy-specific APYs ranging from 0% to 6.79% and a total management fee of 0.25%.

• The vault maintains an overall risk score of 1 out of 5 (representing the highest security level), which strictly limits the inclusion of strategies to those that meet this specific safety threshold.

Main Street msY: 11.39% APY

• The msY vault utilizes CME index box spreads engineered to eliminate delta and gamma exposure, resulting in a strategy where underlying market fluctuations have minimal impact on profit and loss.

• Vault capital is deployed into short-duration institutional options trades, converting CME box spread yields into an on-chain token (msY) that accrues USD-denominated returns.

• The strategy employs laddered exposure across multiple expiries to maintain low interest-rate duration and includes a capacity-aware mechanism to throttle inflows if they threaten to compress yields or alter the risk profile.

Falcon Finance sUSDf: 6.81% APY

• sUSDf functions as a yield-bearing representation of staked USDf, where the exchange rate between the two tokens increases over time to reflect accumulated returns from Falcon’s underlying strategies.

• The "Classic Yield" option allows users to mint sUSDf with no lock-up period, providing the flexibility to unstake and claim accrued yield at any time.

• While Falcon does not levy internal fees for staking or unstaking, users remain responsible for the standard Ethereum network gas fees required to process these on-chain transactions.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.