Solvo Legal, a legal firm, has announced the unveiling of the “Regulatory Framework for Asset Tokenisation in India” at the Fintech Festival India Bangalore City Experience, authored by Purushottam Anand, partner, Solvo Legal, and Sharat Chandra, a blockchain and emerging technology evangelist.
According to an official release, the framework addresses the application of distributed ledger technologies (DLTs) and smart contracts for asset tokenisation, introducing efficiencies such as automation, transparency, digitisation, disintermediation, and faster clearing and settlement. Through recognising three types of tokens based on their nature and functions, which are payment or exchange tokens, utility tokens, and security tokens, the framework aims to clarify the regulatory landscape for asset tokens, which has value backed by or referenced to any asset, value, or right.
Reportedly, the regulatory proposal advocates a phased approach to transition from the current regulatory space to fostering a DLT-based digital exchange ecosystem. In the first phase, entities may issue asset tokens that are not securities, complying with registration and other requirements prescribed by the Financial Intelligence Unit, India (FIU). However, issuance and offering of VDAs under certain schemes is expected to be subjected to securities law. In phase two, ICO Guidelines are believed to be released, prescribing eligibility, threshold, disclosure, reporting, and compliance requirements. In phase three, a regulatory framework is expected to be established specifically for digital securities, mirroring securities and leveraging DLT-based technology.
“We believe this framework is a step towards enabling innovation in the landscape of asset tokenisation in India,” Anand said.
