Two participants in Securities Commission Malaysia’s inaugural regulatory sandbox are preparing to introduce blockchain-driven solutions aimed at improving supply chain financing and peer-to-peer lending for small and medium enterprises. The initiatives, led by Virtual Economy Technology Sdn Bhd and PeerHive (M) Tech Sdn Bhd, are part of the sandbox’s alternative financing track and will be tested over a 12-month period under regulatory supervision.
Virtual Economy Technology, the developer behind V Systems, is building a blockchain-based supply chain financing platform in collaboration with a major Malaysian bank, with a memorandum of understanding expected to be finalized. At the same time, PeerHive is piloting a decentralized financing protocol designed to replace traditional trustee-based structures with smart contracts, enabling investors to fund SME loans using stablecoins.
Blockchain Enhances Supply Chain Financing
V Systems’ platform is designed to extend financing deeper into supply chains by leveraging blockchain technology. The company’s leadership indicated that banks will initially remain the primary financiers, using existing credit lines to fund suppliers against verified invoices. However, the platform will also introduce a liquidity pool that includes corporate treasuries, investment funds, and family offices, thereby expanding the funding base and increasing competition.
During the sandbox phase, participation in the liquidity pool will be limited to fewer than ten entities. Company representatives explained that the infrastructure would first focus on establishing stable financing flows between buyers and suppliers before expanding into broader funding mechanisms. They added that the long-term objective is to create an alternative financing environment that complements traditional banking systems while maintaining collaboration with financial institutions.
The liquidity pool model is expected to offer efficiency gains for corporate treasuries. Instead of directly paying suppliers early at a discounted rate, which could impact accounting and tax outcomes, treasuries would allocate capital into the pool as an investment. This structure preserves the original invoice value while allowing investors to earn returns.
Tokenization Enables Deep-Tier Credit Access
The platform introduces tokenization as a core mechanism for improving transparency and accessibility. Once a buyer confirms an invoice, it is converted into a blockchain-based digital asset representing the payment obligation, complete with a maturity date. Suppliers receive tokens reflecting the full invoice value, allowing them to access financing based on the buyer’s creditworthiness rather than their own.
Executives explained that this system prevents duplicate financing by recording transactions on-chain and enables suppliers to draw funds incrementally rather than as a single lump sum. Additionally, the token can be transferred across multiple tiers within a supply chain, allowing smaller participants further downstream to access financing at favorable rates.
This approach addresses longstanding challenges in supply chain financing, including limited reach beyond first-tier suppliers, manual processing inefficiencies, and risks associated with poor transparency.
PeerHive Introduces Smart Contract Lending Model
Meanwhile, PeerHive is advancing a decentralized peer-to-peer financing protocol built on smart contracts. The company is working toward securing a Recognized Market Operator license following the sandbox phase. Its leadership indicated that the platform removes the need for intermediaries such as trustees, enabling funds to flow directly between investors and borrowers.
Each investment opportunity on the platform is governed by its own smart contract, which automates the distribution of principal and interest repayments. This structure ensures transparency, as all transactions are recorded on the blockchain and visible to participants.
Investors can participate using MYRC, a Malaysian ringgit-pegged stablecoin issued by Blox Blockchain Sdn Bhd. Funds deposited in fiat currency are converted into the stablecoin, allowing seamless interaction with the smart contract system. Company representatives emphasized that stablecoins are used to avoid the volatility associated with cryptocurrencies such as Bitcoin or Ethereum, which could deter borrowers.
Driving Innovation in Alternative Financing
PeerHive’s platform is open to both retail and institutional investors and has already identified a pipeline of borrowers awaiting funding. During the sandbox period, the company aims to scale its lending portfolio, achieve high fulfillment rates for investment opportunities, and validate its product-market fit while maintaining technical reliability.
Overall, these sandbox initiatives reflect Malaysia’s broader push to explore innovative financial technologies. By integrating blockchain into supply chain and lending systems, both platforms aim to improve efficiency, transparency, and accessibility for SMEs. The outcomes of these trials are expected to inform future regulatory approaches and potentially reshape alternative financing models in the region.
