Unlocking India's Digital Asset Future: The NLSIU-SAM White Paper
The National Law School of India University (NLSIU), in partnership with Shardul Amarchand Mangaldas & Co. (SAM), has unveiled a pivotal research contribution titled Designing a Framework for Asset Tokenisation in India. Released on April 6, 2026, this white paper arrives at a critical juncture for India's fintech evolution, offering a comprehensive regulatory roadmap amid growing interest in real-world asset (RWA) tokenisation. Authored by NLSIU faculty including Dr. Sudhanshu Kumar, Varsha Aithala, and Karthik Suresh, alongside SAM experts like Shilpa Mankar Ahluwalia and Purva Anand, the document synthesizes legal analysis, global benchmarks, and practical policy pathways. It positions tokenisation not as disruptive novelty but as an extension of established principles, poised to enhance efficiency and inclusion in India's USD 110 billion-plus fintech ecosystem.
What is Asset Tokenisation? Defining the Core Concept
Asset tokenisation refers to the process of converting rights, title, interests, claims, or economic benefits in an underlying asset—be it real estate, commodities, intellectual property, or infrastructure—into digital tokens secured by distributed ledger technology (DLT), such as blockchain. These tokens represent fractional ownership or specific rights, enabling programmable features like automated transfers via smart contracts.
Step-by-step, the lifecycle unfolds as follows:
- Asset Selection and Verification: Identify eligible assets (e.g., property deeds, gold reserves) and conduct legal valuation/audit to confirm ownership and compliance.
- Token Creation (Issuance): Generate cryptographically secure tokens on a DLT platform, bundling rights (e.g., ownership + rental yield) or unbundling them for targeted investors.
- Custody and Transfer: Store tokens with custodians (full, shared, or non-custodial); enable peer-to-peer transfers 24/7 with real-time settlement.
- Trading and Redemption: List on platforms for secondary markets; redeem for underlying value or cash via smart contract automation.
This democratizes access: high-value assets like a ₹10 crore property become investable in ₹10,000 units, leveraging India's 88.6 crore internet users and low data costs (~₹13/GB).
The Groundbreaking Token Classification Framework
🔗 At the heart of the white paper is a practical taxonomy classifying tokens into three categories: securities tokens, investment tokens, and ownership tokens. This functional approach prioritizes substance over form, aligning with the 'same risk, same regulation' principle.
| Category | Description | Examples | Regulator |
|---|---|---|---|
| Securities Tokens | Represent equity/debt-like claims with profit-sharing risks | Tokenised bonds, equity in SPVs | SEBI |
| Investment Tokens | Yield-generating without equity control (e.g., rentals) | Real estate rental streams, private credit | SEBI/RBI |
| Ownership Tokens | Pure property rights, transferable title | Fractional land deeds, gold bars | Property laws/MCA |
Real-world examples include the World Bank's CHF Digital Bond (securities) and Alt DRX (investment). Excludes payment tokens (RBI domain) to sidestep volatility risks.
Navigating India's Legal Landscape: Key Anchors and Gaps
Tokens intersect with the Indian Contract Act (1872) for enforceability, Transfer of Property Act (1882) for ownership, SEBI Act (1992) for securities classification (Howey-like tests), IT Act (2000) as electronic records, and FEMA (1999) for cross-border flows. Challenges include smart contract validity (no dedicated code), dual on/off-chain records, and taxation ambiguities (income vs. capital gains).
The white paper anchors tokens as 'property' under Article 300A, securitizable via SARFAESI (2002), but flags gaps in depositories for DLT interoperability and AML under PMLA (2002). Quote: 'Tokens are property capable of being subjected to control in a legal sense.'
Global Benchmarks: Lessons for India
Drawing from six jurisdictions, the paper contrasts EU's MiCA (comprehensive for crypto-assets), Switzerland's DLT Act (custody innovations), UK's EMRs (regulated platforms), Singapore's Project Guardian (sandbox), US's case-by-case (SEC Howey), and others. Maturity varies: EU/Singapore lead in interoperability; India can adapt via sandboxes like IFSCA's. For details, explore the full white paper.
Photo by Amaan Abid on Unsplash
A Phased Regulatory Roadmap Tailored for India
The proposed pathway is pragmatic: phased and parallel development alongside legacy systems.
- Phase 1: Clarity and Sandboxes (Immediate): Issue Guidance Note on taxonomy; launch regulator-specific cohorts (SEBI for securities, RBI for credit).
- Phase 2: Infrastructure Build (1-2 years): Amend SCRA/Depositories Act for DLT; enable wCBDC settlement; custody norms.
- Phase 3: Integration (3+ years): Full interoperability, 24/7 markets, taxation harmonization.
Emphasizes inter-agency committee (RBI/SEBI et al.), leveraging India Stack for KYC/settlement.
Transformative Benefits and Economic Impacts
Tokenisation promises fractionalisation for retail access, liquidity for ₹50 lakh crore illiquid realty, cost reductions (up to 50% via automation), and inclusion (targeting underserved MSMEs). India's market: USD 133.5 million in 2026, growing to USD 245.7 million by 2033 (CAGR ~9%). Globally, RWAs hit USD 24 billion in 2026.
Case study: SEBI's SM-REIT sandbox tokenized warehouses (28% volume), enabling ₹100 crore+ raises.
Risks, Challenges, and Safeguards
Risks include custody failures (FTX-like), smart contract bugs, AML evasion, and scalability. Mitigation: compliance-by-design, audits, 'oracles' for off-chain data, hybrid custody. Cultural context: India's DPI maturity aids trustless verification.
Real-World Momentum: Indian Pilots and Global Parallels
RBI's tokenised bond pilots (2023-26) settled ₹10 crore+; Gold tokens via MMTC-PNB (fractional sovereign gold). Art/IPR: Emerging via platforms like Maadiveedu. Aligns with Asset Tokenisation Bill 2026 for licensing. See the bill text.
NLSIU's Leadership in Fintech Policy Research
NLSIU, India's premier law school, exemplifies higher education's policy impact through interdisciplinary research. This white paper builds on prior works like digital lending analyses, influencing regulators via consultations. Experts praise its balanced view: 'A forward-looking blueprint leveraging India's DPI strengths.' Ties to academic careers in fintech law.
Photo by jaikishan patel on Unsplash
Stakeholder Perspectives and Future Outlook
Industry hails phased approach; regulators eye sandboxes. Outlook: USD 100 billion market by 2030, boosting GDP via MSME credit. Actionable: Policymakers adopt taxonomy; academics expand research; professionals upskill in DLT law. The white paper charts a compliant, innovative path for Viksit Bharat.