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Tokenisation: Democratising Finance & Expanding Investment Access

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  Published in Stocks and Investing on Tuesday, February 10th 2026 at 5:32 GMT by newsbytesapp.com
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Beyond the Basics: Understanding the True Potential of Tokenisation

At its core, tokenisation is the process of converting rights to an asset into a digital token on a blockchain. While the initial concept focuses on representing traditional assets like stocks, bonds, and real estate, the possibilities extend far beyond. Consider intellectual property, carbon credits, revenue-sharing agreements, or even fractional ownership of luxury goods - all can be represented and traded as tokenised securities.

This expands accessibility dramatically. Previously, investing in high-value assets was limited to those with substantial capital. Tokenisation enables fractional ownership, allowing smaller investors to participate in markets previously out of reach. This democratisation of finance has the potential to unlock significant capital and fuel economic growth.

The Mechanics of Tokenisation: A Step-by-Step Breakdown

The process, as previously outlined, is relatively straightforward, but requires careful consideration at each stage.

1. Asset Due Diligence & Legal Framework: Before tokenising any asset, a thorough due diligence process is crucial. This includes verifying ownership, assessing the asset's value, and establishing a robust legal framework. Smart contracts, self-executing agreements written into code, are key. They automatically enforce the terms of the agreement, ensuring transparency and reducing the need for intermediaries.
2. Blockchain Selection: Choosing the right blockchain is critical. While Ethereum has been the dominant platform for token issuance, other blockchains like Polygon, Solana, and even potentially India's own blockchain initiatives are gaining traction due to scalability and cost considerations.
3. Token Standard: The token needs to adhere to a specific standard (like ERC-20 on Ethereum) to ensure interoperability and compatibility with various exchanges and wallets.
4. Security Token Offering (STO) or Private Placement: Tokens can be offered to investors through an STO, which is a regulated offering, or through a private placement, which is subject to different rules.
5. Custody & Trading: Secure custody of the tokens is paramount. Investors need access to reliable wallets and trading platforms. The rise of Decentralized Exchanges (DEXs) and regulated security token exchanges will play a vital role in providing liquidity.

SEBI's Role & The Path to Regulation

The Securities and Exchange Board of India (SEBI) is taking a cautious yet proactive approach. While currently operating in a somewhat grey area, SEBI recognises the potential of tokenised securities but is rightly focused on investor protection and maintaining market integrity.

Key areas under consideration include:

• KYC/AML Compliance: Ensuring robust Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.
• Investor Accreditation: Determining eligibility criteria for investors participating in STOs.
• Disclosure Requirements: Mandating comprehensive disclosure of information about the underlying asset and the token itself.
• Custody Regulations: Establishing clear guidelines for the secure custody of digital assets.
• Trading Platform Regulations: Overseeing the operations of security token exchanges.

Recent statements from SEBI officials suggest a framework could be finalised in late 2026 or early 2027, providing much-needed clarity for market participants.

The Indian Landscape: Key Players & Current Trends

While still nascent, the Indian tokenised securities market is witnessing increasing activity. Platforms like Gestation Technologies (real estate), KrossWired (digital asset infrastructure), and Onchain Capital (blockchain investment) are pioneering the space. Several other startups are also emerging, focusing on areas like invoice discounting, supply chain finance, and even art tokenisation.

We're also seeing growing interest from traditional financial institutions exploring tokenisation as a way to improve efficiency and reduce costs. This convergence of traditional finance and blockchain technology is a positive sign for the future of the market.

Challenges & The Road Ahead

Despite the potential, several challenges remain. Regulatory uncertainty is a major hurdle. The lack of clear rules can deter investors and stifle innovation. Investor education is also crucial. Many potential investors are unfamiliar with blockchain technology and tokenised securities, leading to apprehension.

Furthermore, interoperability between different blockchain platforms and the need for standardised protocols are essential for wider adoption. Addressing these challenges will require collaboration between regulators, industry players, and technology providers.

The future of tokenised securities in India is bright. As the regulatory framework matures and investor awareness grows, we can expect to see a significant increase in the number of tokenised assets and trading volumes. This innovative market has the potential to transform the Indian financial landscape, unlocking new investment opportunities and driving economic growth.