I can say the wood with the fungus (and that is what this is) is not Malaysian Driftwood. I think it is manzanita, but won't insist on that. The colour is a bit odd, but that may be due to the lighting and/or camera.
With so many species of fungus, it is impossible to say if this one is toxic or not; that would take an examination under the microscope by a microbiologist. So, you have two options. One is to remove the wood, boil it as much as you can, and replace it to see if this reappears. Second is to remove it and forget it; I had to do this with mine, after my attempts to clean it worked for a couple months, then the blasted fungus returned and fish began dying because it was on the back side and I didn't see it at first. Third is to leave it and watch for any signs of trouble: water may begin to cloud, whitish cloudiness; fish will become listless, lethargic; respiration will quicken, then some upper fish may begin to stay near the surface, and then gasp for air. This is going much too far, and will likely kill the fish by this time. But if you are prepared to leave the wood, those are the signs to look for. Again, this fungus may be harmless, but there is no way to tell except as I've set out.
In my case, the corys were first to be affected; they got listless, breathing much heavier than normal. At that point I removed the wood and did a 75% water change that solved the problem with no fish loss. I scrubbed the wood in boiling water, then placed it in a non-fish tank for 3 months with no sign of fungus, so it went into another fish tank. After a few weeks, fish began dying and I discovered the fungus had reappeared, so the wood went out to the garden.