India's market regulator is shifting ahead with a tokenized company bond pilot undertaking 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 Might 26, Securities and Change Board of India Chairman Tuhin Kanta Pandey stated the regulator has accredited 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 improve investor participation. pic.twitter.com/G6ogMUmcW2
— Crypto India (@CryptooIndia) Might 27, 2026
In a media interplay, Pandey stated the undertaking 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 may take six to 9 months as regulators and market members will undergo a number of operational levels.
On the similar time, the proposal has refocused India's strategy to blockchain expertise, particularly because the Indian authorities continues to take care of extremely restrictive insurance policies in direction of retail crypto transactions whereas encouraging chosen institutional use of DLT infrastructure.
Pandey stated that whereas sure DLT-based methods are already in use in areas resembling covenant monitoring and custodians, SEBI now needs to check whether or not tokenization can remedy long-standing inefficiencies in India's company bond market.
India's company bond market is estimated to be round Rs 59,000 crore, based on business estimates cited in extra context, however secondary market participation stays low as many institutional traders maintain bonds till maturity. Worth discovery and buying and selling exercise throughout the section has additionally declined as a consequence of restricted retailer participation.
Within the proposed pilot, tokenization will rework conventional mounted revenue 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 traders.
Relating to the anticipated advantages, Pandey stated tokenization may enhance liquidity and help “instantaneous autonomous settlement” throughout the bond market ecosystem.
RBI framework anticipated quickly
Through the occasion, Pandey stated 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 issues associated to future advances in quantum computing. In accordance with Pandey, regulators ought to examine whether or not the event of quantum methods may 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 circumstances in regulated monetary markets, the nation's perspective in direction of non-public cryptocurrencies stays tightly managed by taxation and compliance guidelines.
Beneath India's present digital digital asset tax regime, earnings from digital foreign money transactions are taxed at a flat charge of 30%, with 1% tax withheld on every transaction. Present guidelines additionally don’t enable traders to offset losses in cryptocurrencies in opposition to earnings or extraordinary revenue.
In the meantime, digital foreign money exchanges working in India should register with the Indian Monetary Intelligence Bureau and adjust to anti-money laundering regulation necessities, together with strict buyer identification procedures and transaction reporting necessities.
Latest tax reporting laws 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 may end in fines.
India can also be within the technique of integrating with the OECD's Cryptoasset Reporting Framework. This can be a international 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 atmosphere with permission collectively overseen by SEBI and RBI, separating the trouble from public blockchain networks generally related to cryptocurrencies resembling Bitcoin and Ethereum.
