India’s market regulator is shifting ahead with a tokenized company bond pilot challenge to check whether or not distributed ledger expertise can enhance liquidity and settlement effectivity within the nation’s bond market.
Talking on the sidelines of the CareEdge Debt Market Summit in Mumbai on Could 26, Securities and Trade Board of India Chairman Tuhin Kanta Pandey mentioned the regulator has permitted a pilot initiative to discover the usage of distributed ledger expertise (DLT) in company bond buying and selling and settlement.
BREAKING: 🇮🇳 SEBI launches pilot of tokenized company bonds to enhance transparency and enhance investor participation. pic.twitter.com/G6ogMUmcW2
— Crypto India (@CryptooIndia) Could 27, 2026
In a media interplay, Pandey mentioned the challenge will initially function on a restricted scale earlier than a choice is taken to increase the framework throughout the market. In accordance with the SEBI chairman, the implementation course of might take six to 9 months as regulators and market individuals will undergo a number of operational levels.
On the similar time, the proposal has refocused India’s method to blockchain expertise, particularly because the Indian authorities continues to keep up extremely restrictive insurance policies in direction of retail crypto transactions whereas encouraging chosen institutional use of DLT infrastructure.
Pandey mentioned that whereas sure DLT-based techniques are already in use in areas akin to covenant monitoring and custodians, SEBI now needs to review whether or not tokenization can clear up long-standing inefficiencies in India’s company bond market.
India’s company bond market is estimated at round Rs 59,000 crore, as per business estimates cited in extra context, however secondary market participation continues to be low as many institutional buyers maintain bonds till maturity. Restricted retailer participation has additionally lowered worth discovery and buying and selling exercise throughout the phase.
Within the proposed pilot, tokenization will remodel conventional mounted earnings merchandise into blockchain-based digital tokens able to automated and near-instantaneous settlement. In extra context, it famous that regulators are additionally assessing whether or not fractional possession buildings can decrease limitations to entry for small buyers.
Concerning the anticipated advantages, Pandey mentioned tokenization might enhance liquidity and assist “on the spot autonomous settlement” throughout the bond market ecosystem.
RBI framework anticipated quickly
In the course of the occasion, Pandey mentioned that the Reserve Financial institution of India is individually engaged on draft pointers associated to the framework and can announce the ultimate requirements quickly. He added that SEBI and the inventory exchanges are able to proceed with the method as soon as the central financial institution’s approval is accomplished.
The SEBI Chairman additionally acknowledged the dangers related to this expertise, significantly considerations associated to future advances in quantum computing. In accordance with Pandey, regulators ought to examine whether or not the event of quantum techniques might finally impression the cryptographic safety utilized in DLT-based infrastructure.
India to rein in crypto sector
Though India has opened the door to blockchain use instances in regulated monetary markets, the nation’s angle in direction of non-public cryptocurrencies stays tightly managed by taxation and compliance guidelines.
Below India’s present digital digital asset tax regime, earnings from digital foreign money transactions are taxed at a flat price of 30%, with 1% tax withheld on every transaction. Present guidelines additionally don’t permit buyers to offset losses in cryptocurrencies towards earnings or strange earnings.
In the meantime, digital foreign money exchanges working in India should register with the Indian Monetary Intelligence Bureau and adjust to anti-money laundering legislation necessities, together with strict buyer identification procedures and transaction reporting necessities.
Latest tax reporting rules have additional elevated oversight. Digital asset platforms shall be required to submit user-level transaction information on to the Revenue Tax Division, however late or inaccurate reporting might lead to fines.
India can also be within the means of integrating with the OECD’s Cryptoasset Reporting Framework. It is a world information sharing system that enables authorities to obtain info on offshore digital asset holdings belonging to Indian residents.
In distinction, the company bond tokenization trial will function inside a regulatory-backed surroundings with permission collectively overseen by SEBI and RBI, separating the trouble from public blockchain networks generally related to cryptocurrencies akin to Bitcoin and Ethereum.
