Sebi launches Demat 2.0 pilot to tokenise bonds using blockchain tech

The Securities and Exchange Board of India (Sebi) is piloting a next-generation dematerialised securities system, dubbed Demat 2.0, that leverages blockchain and tokenisation to overhaul bond market infrastructure. The pilot programme will utilise distributed ledger technology to record ownership and facilitate transactions, marking a significant departure from conventional centralised systems.

Tokenisation converts bonds into digital tokens on a blockchain network, enabling faster settlement and enhanced transparency. Despite the technological shift, the bonds retain their existing legal character and investor protections remain intact, ensuring continuity in regulatory safeguards and rights.

The distributed ledger approach streamlines transaction recording by eliminating intermediaries and reducing settlement timelines. This modernisation is expected to enhance market efficiency while maintaining the integrity of India's fixed-income securities market. The pilot will test operational viability and identify any technical or regulatory adjustments needed before broader implementation.

Sebi's initiative aligns with global trends toward blockchain-based securities infrastructure. By tokenising bonds, the regulator aims to reduce settlement risks, improve liquidity, and lower transaction costs for investors across India's debt markets. The pilot phase will be critical in determining the feasibility of scaling the technology to the broader financial ecosystem.