India Launches Demat 2.0 to Tokenize Corporate Bonds

Indian financial regulators have introduced a new infrastructure project called Demat 2.0. This system allows for the issuance and settlement of corporate bonds as digital tokens. Unlike experimental projects on public blockchains, this initiative integrates directly into the existing, regulated securities market under the supervision of the Securities and Exchange Board of India and the Reserve Bank of India.

The project uses an atomic delivery versus payment model to settle trades instantly. By connecting to the digital rupee, the system eliminates the usual two or three day wait time for transactions. Three major companies have already issued 116 million dollars worth of these tokenized bonds, proving that the system can handle large scale institutional interest.

Investors will continue using their existing demat accounts, which removes the need for new blockchain wallets. Smart contracts handle coupon and redemption payments automatically. This phased rollout will eventually expand to include secondary market trading and retail access.

While this is a significant step for tokenized assets, the system remains a private and permissioned network. It focuses on efficiency within the current financial framework rather than moving assets to public blockchains. This approach keeps existing rules for credit ratings and investor protection firmly in place.