RBI crypto policy continues to draw a distinction between private cryptocurrencies and the technology used to build digital financial infrastructure. Governor Sanjay Malhotra reiterated that position on October 3, saying India supports distributed ledger technology and tokenization while maintaining a cautious approach toward cryptocurrencies.
Speaking at the Kautilya Economic Conclave in New Delhi, Malhotra pointed to concerns involving monetary sovereignty, monetary policy and capital flows.
“So, our approach has been to promote the underlying technologies,” - Sanjay Malhotra
For Indian readers, the development is best understood through an initiative already underway: regulated corporate bonds recorded on distributed ledgers and settled using the digital rupee. Support for that infrastructure does not amount to an endorsement of cryptocurrency investments.
India’s tokenization push already includes ₹1,025 crore in bonds
On September 10, SEBI announced the launch of Demat 2.0, a pilot for issuing, holding, trading and settling tokenized corporate bonds. Malhotra and SEBI Chairman Tuhin Kanta Pandey jointly announced the initiative at the Global Fintech Fest in Mumbai.
At that point, three issuers had completed transactions totaling ₹1,025 crore:
Issuer | Issuance date | Amount raised | Investors |
REC Limited | September 7, 2026 | ₹500 crore | 18 |
Larsen & Toubro | September 9, 2026 | ₹500 crore | 4 |
IIFL | September 9, 2026 | ₹25 crore | 1 |
Total | Initial disclosed issuances | ₹1,025 crore | — |
These figures describe the issuances disclosed at the pilot’s launch, rather than an updated October market total.
Demat 2.0 connects the securities infrastructure with RBI’s wholesale central bank digital currency through the Unified Market Interface. Its intended benefits include faster settlement, less reconciliation between institutions and automated interest and redemption payments.
This gives the policy discussion a concrete foundation. India is testing how ledger technology can improve existing financial instruments while retaining their regulatory framework.
RBI crypto policy remains focused on control over money
Malhotra’s caution centers on what widespread use of private digital currencies could mean for the monetary system.
One concern is the “singleness of money”: the principle that different forms of money within a currency system should remain interchangeable at the same value. He also highlighted the implications for monetary policy and capital-flow restrictions, particularly in emerging economies.
On payments, Malhotra argued that domestic transactions are already fast, inexpensive and convenient in India. He identified cross-border payments as the harder challenge, with central bank digital currencies among the possible solutions.
His prepared address placed tokenization within a broader financial-stability framework. Innovation, he said, must preserve sound institutions, settlement finality, financial integrity and the singleness of money.
The policy question therefore extends beyond whether a technology processes transactions quickly. It also concerns who issues the money, who stands behind a financial claim and how authorities manage risks when something fails.
What a tokenized bond changes for an investor
Under Demat 2.0, the bond is issued as a native digital token on a private, permissioned distributed ledger owned by the depositories.
Its legal character remains unchanged. The issuer’s repayment obligations, coupon, maturity, covenants and investor rights continue to apply. Tokenization changes the infrastructure used to record and transfer the security.
That distinction has a practical consequence: a better settlement system cannot make a weak borrower creditworthy.
Investors still need to assess the issuer’s ability to pay, the bond’s terms and the price at which they invest. The word “tokenized” describes how the instrument operates; it does not establish the quality of the investment.
The pilot also retains an institutional custody structure. Depositories manage the cryptographic keys, and participation uses an extension of the investor’s existing demat account, linked with a CBDC wallet.
Why digital rupee settlement matters
Demat 2.0 is designed to link the securities transfer and payment through atomic delivery-versus-payment. Both legs settle together, or neither settles.
This addresses the risk of one party delivering a bond without receiving the corresponding payment. It does not remove the bond issuer’s default risk or guarantee an investor’s return.
Consider a simple purchase: the buyer needs the bond, while the seller needs payment. Linking those movements reduces the exposure created when one happens before the other.
RBI’s experimentation extends beyond corporate bonds. In his September fintech address, Malhotra discussed tokenized certificates of deposit using wholesale CBDC, alongside programmable digital rupee pilots exploring targeted government transfers.
The emphasis is on testing financial infrastructure with identifiable institutions and defined obligations.
Crypto compliance continues on a separate track
The tokenization initiatives sit alongside continuing enforcement against cryptocurrency service providers.
On September 9, FIU-IND issued non-compliance notices to 15 virtual digital asset service providers under the Prevention of Money Laundering Act. The action also included notices concerning application and URL takedowns.
Providers serving India must meet applicable registration and reporting obligations regardless of whether they maintain a physical presence in the country.
For users, these are different regulatory questions. A platform’s compliance obligations concern the services it provides. A tokenized bond pilot concerns securities-market infrastructure. Neither should be treated as a blanket approval of every product carrying a blockchain label.
Bitnxt View: Judge the financial claim behind the token
Bitnxt’s assessment is that India’s strongest tokenization opportunity lies in improving specific financial processes while keeping responsibility clear.
The useful measures will be settlement reliability, servicing accuracy, operating costs and the handling of exceptions. A successful issuance demonstrates that the infrastructure can execute a transaction; sustained use must establish whether it improves the market.
A related distinction appears in Bitnxt’s coverage of CSD BR and BTG Pactual fund records on the XRP Ledger. That Brazilian project begins with mirrored records while existing systems retain legal authority. Its structure differs from India’s native tokenized bond pilot, but both make the relationship between digital records and enforceable rights central to the story.
For Indian investors, the first question should remain straightforward: what does the token represent, and who is legally responsible for honoring it?
Malhotra’s remarks support continued experimentation with that infrastructure. They do not establish a new authorization for private cryptocurrencies or a timetable for changing India’s broader crypto policy.
