Bursa Malaysia launched the Bursa Gold Dinar (BGD), a digital platform to buy and sell 24k gold, as part of its repositioning as a multi-asset exchange on the 16th January this year. The ability to purchase stocks on Bursa Malaysia with the BGD may be in the cards “far down the line”, according to Umar Swift, CEO of Bursa Malaysia.
The product, which allows for the redeeming of physical gold dinar coins, seeks to bridge the equity and gold investor base.
“At this point in time, BGD is not, if you like, a currency,” Umar explained.
Notwithstanding the current limitations of the BGD as a medium of exchange, Umar shared that the vision for BGD is to establish a relationship with a new group of investors and bring them to the equities market.
In order for the BGD to act as a medium of exchange, Bursa Malaysia would need to acquire an e-money license from Bank Negara Malaysia (BNM).
Should Bursa Malaysia pursue establishing the BGD as a medium of exchange, as Umar suggested, it may find itself in unchartered territory as the exchange is the frontline regulator of the Malaysian capital market operating a self-regulatory organization model under the supervision of the Securities Commission Malaysia.
While there are several entities holding e-money licenses from BNM, none of them are regulators. In the regulator e-money frontier, BNM has been working on its central bank digital currency (CBDC) project since late 2021.
Notably, while the Financial Sector Blueprint 2022–2026 projected the launch of the final phase of the CBDC project in 2023, the central bank has yet to issue CBDC.
The project, which has seen vocal privacy concerns following its announcement, has culminated in the development of two prototypes for a shared platform that could enable international settlements using digital currencies issued by multiple central banks.
How the potential BGD ‘currency’ would play into, conflict with or complicate BNM’s CBDC vision is worth considering.
Similar to the CBDC project, Bursa Malaysia’s digital gold dinar project has also experienced delays. Announced in July 2022, the BGD project was originally slated for launch in Q2 to Q3 last year.
Umar shared that the launch was pushed back to conduct more internal testing as well as to be part of its larger repositioning which, in addition to the BGD launch, saw the exchange launch a customer portal and a new platform to connect investors directly with dealer representatives.
More noticeably, the repositioning as a multi-asset exchange saw Bursa Malaysia undergo a facelift with the launch of its new logo and corporate identity.
Commenting on the fate of the BGD endeavor considering that the first Shariah-certified gold digital trading platform, HelloGold, exited the retail market in January last year, Umar stressed the BGD’s under 2% competitive spread.
“We are a trusted brand, we are a large platform, we have reach … It is no coincidence that once the app [HelloGold] heard we were coming to market, they shut down,” Umar commented.