Crypto commentator, SMQKE, has shared a provocative insight from a recent Bank Negara Malaysia (BNM) working paper: “Private tokens such as XRP may be widely used as means of payment outside the banking system in the future, replacing CIC or bank deposits.”
The post went viral on X, underlining growing interest in how digital tokens might evolve as alternatives to conventional deposit systems. SMQKE’s timely highlight focused attention on Malaysia’s pioneering exploration of tokenized financial instruments.
From Working Paper to Wider Discourse
The quote originates from BNM’s working paper (WP3/2025), Fundamentals of Modern Money and its Application to Central Bank Digital Currency (CBDC): An Exploratory Shariah Analysis. This in-depth study explores modern money as a social construct supported by balance-sheet conventions and evaluates whether privately issued tokens could one day function similarly to bank deposits.
‼️ JULY 2025 — CENTRAL BANK OF MALAYSIA REPORT CLAIMS XRP MAY REPLACE BANK DEPOSITS AS BITCOIN AND ETHEREUM DEEMED UNSUITABLE FOR PAYMENT SYSTEMS‼️
“Private tokens such as XRP may be widely used as means of payment outside the banking system in the future, replacing CIC or bank… pic.twitter.com/WhAUYbhQdw
— SMQKE (@SMQKEDQG) August 11, 2025
The authors carefully map out legal, Shariah, and prudential dimensions, indicating that while tokens like XRP possess compelling features, regulatory and religious compliance frameworks must be fully addressed before any practical implementation.
Why XRP Appeals
BNM’s mention of XRP is strategic. The XRP Ledger is engineered for low-cost, high-throughput payments and near-instant settlement—attributes that align closely with the characteristics expected of payment-grade tokens.
These technical strengths make XRP an apt example of how private tokens, under certain conditions, might emulate or complement bank deposits in everyday transactions.
Bitcoin & Ethereum: A Contrast
The paper draws a deliberate contrast between XRP and more established cryptocurrencies such as Bitcoin and Ethereum. While these prominent tokens serve as store-of-value assets with strong decentralization, their high price volatility, limited throughput, and consensus mechanisms make them less suited for routine payments or scalable settlement rails.
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This rationale underpins BNM’s classification of Bitcoin and Ethereum as “unsuitable payment instruments,” especially compared to optimized alternatives like XRP.
Understanding the Implications
It is crucial to interpret BNM’s working paper as exploratory, not prescriptive. Although the research signals openness to examining private token use cases, BNM has not enacted any policy changes.
Central banks must balance innovation with monetary stability—the potential risk of deposit disintermediation and its impact on monetary control remains paramount. Yet, BNM’s inquiry places Malaysia among a select group of central banks actively assessing private digital tokens as part of future payment architecture.
What’s Next for Malaysia
The working paper lays the groundwork for future collaboration. Possible avenues include pilot programs for tokenized payments, CBDC integration studies, and Shariah-compliant regulatory frameworks.
Any practical adoption would require layered steps—from legal reforms to consumer protection measures—before tokens like XRP could meaningfully complement or replicate bank deposit systems.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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