Several media outlets have reported that Dubai-based fintech Fasset has obtained a banking license in Malaysia to operate the “World’s First Stablecoin-Based Digital Insurance Islamic Bank”.
That claim, however, is inaccurate.
Fasset’s approval was issued by the Labuan Financial Services Authority (Labuan FSA), which oversees the offshore jurisdiction of Labuan. It is a distinct regulatory regime from Malaysia’s onshore financial system under Bank Negara Malaysia.
Fasset’s own press release, dated 7 October 2025, contributed to the confusion.
The company claimed it had “secured approval from Malaysia to provide banking services” and described this as a licence that would allow it to launch the world’s first stablecoin-powered Islamic bank.
In reality, the approval came from Labuan FSA, not Malaysia’s onshore regulator, and applies only within Labuan’s offshore framework.
Conditional Approvals, Not Banking Licences
In its 10 October 2025 statement, Labuan FSA confirmed that Fasset Islamic Digital Bank Limited and Green Digital Bank Corp. had received conditional approvals under the Guidelines on the Establishment of Labuan Islamic Digital Bank under Sandbox Regulatory Requirements (I-BOX).
These are not full operating licences and are limited to the Labuan International Business and Financial Centre (Labuan IBFC).
Labuan FSA granted the conditional approvals under Section 63 of the Labuan Islamic Financial Services and Securities Act 2010.
The approvals allow both entities to move forward with preparatory work as Islamic digital banks. It is, however, once they meet all operational and prudential requirements set by the regulator.
The authority stated that neither entity may begin business operations until these requirements are fully satisfied.
These measures act as safeguards to ensure institutional readiness and compliance before any provisional licence is issued.
Despite these clear conditions, several international publications reported that Fasset had obtained a licence to operate Malaysia’s first stablecoin-based Islamic digital bank.
That interpretation misrepresents both the jurisdiction and the regulator’s announcement.
Fasset remains under conditional approval in Labuan’s regulatory sandbox, subject to further evaluation before any licence can be granted.
What the Sandbox Approval Actually Means
The I-BOX framework forms part of Labuan FSA’s Digital Financial Sandbox. It was first introduced in 2024 under the Islamic Digital Asset Centre (IDAC) programme.
The sandbox allows digital finance innovators to test their models and compliance readiness in a controlled environment before seeking formal licensing.
In practice, Fasset Islamic Digital Bank Limited and Green Digital Bank Corp. must first meet detailed prudential, governance, and operational benchmarks before they can conduct any business.
Only once these conditions are fulfilled will Labuan FSA consider granting a provisional licence for limited operations under supervision.
Stablecoin Framework Still in Progress
Fasset has promoted its project as the “first stablecoin-based Islamic digital bank”, but no such licence currently exists under Malaysian regulations, as the development of a national stablecoin framework remains ongoing.
It follows an announcement by Prime Minister Datuk Seri Anwar Ibrahim earlier this year.
At the Sasana Symposium 2025, Anwar outlined plans to explore a centralised regulatory structure for stablecoins and tokenised financial assets.
The company has been operating across the UAE, Indonesia, the EU, Turkey, and Pakistan. It has since been expanding its footprint in Asia through Labuan.
The company said it plans to develop an Islamic digital banking model that integrates blockchain-based savings, financing, and payment features.
Featured image: Edited by Fintech News Malaysia based on an image by yogiermansyah22 via Freepik.
