This may or may not be toxic, so monitor the fish behaviour for several days.
There are many species of this sort of fungus, and while many are harmless, some are deadly toxic. I had the latter, and I know of others the same. Only a microbiologist examining the fungus can ascertain the species, and then know if it is toxic or not.
Most of this appears to be safe, and some fish, and shrimp and snails, will eat it. The toxic species will kill fish in time. When I had the latter, it first showed up as a slight cloudiness or haze in the water, something like a bacterial bloom but fairly light; I noticed this slimy fungus/mold-like whitish substance on large stretches of the wood. At the same time I noticed the fish respirating much faster, and they became lethargic, especially the cories. Cories seem especially sensitive to this, and they can die within a few days depending upon the circumstances.
The toxic fungus seems especially common with certain types of branch wood, like spiderwood, grapewood, and azalea. I have never seen it or heard of it on Malaysian Driftwood.