Tokenisation Is Becoming Market Infrastructure, Not a Digital Wrapper

A bond can already exist as an electronic record. Representing it with a token becomes more consequential when the ownership register, payment asset, participant access and subsequent transfers work from the same understanding of the instrument. Otherwise, tokenisation can add another database for operations teams to reconcile.

On 24 August 2026, Reuters reported plans for India's first tokenised corporate-bond issuance in September. State-owned power financier REC was expected to issue less than ₹5 billion, roughly $57 million, in a pilot involving the central bank and securities regulator. Investors would reportedly use a wholesale-CBDC wallet for payment and a new DEMAT 2.0 securities wallet being developed by Indian depositories. Secondary trading was expected in December, after an initial three-month lock-in. Reuters: Reported pilot plans

These were reported plans attributed to sources familiar with discussions. RBI, SEBI, REC, NSDL and CDSL had not publicly confirmed that framework at the time of the report. The issuer, timetable, wallet design and trading arrangements should therefore remain attributed and conditional, rather than be presented as completed issuance or settled regulation.

There was a wider policy context. In May 2026, SEBI publicly said it was examining bond tokenisation, particularly around online bond platforms, to improve accessibility, transparency and efficiency. India's wholesale digital-rupee pilot had operated since 2022, beginning with secondary-market government-securities settlement and later extending to interbank lending and borrowing. RBI described efficiency, security and reduced settlement risk as objectives. SEBI speaking notes, RBI wholesale pilot, RBI Digital Rupee FAQs

The infrastructure has to connect more than issuance

A conventional bond transaction already depends on an issuer and legal instrument, issuance and investor-eligibility processes, securities accounts, a depository or registry, a venue or bilateral trading process, cash accounts, clearing where relevant, settlement, custody, corporate actions, coupon payments, maturity or redemption and reporting. The bond is one object in that system.

Disconnected token, depository, bank, venue and issuer records can describe the same transaction differently. An efficient ledger inside one platform does not by itself resolve those differences. The reported Indian experiment was interesting because it appeared to connect securities wallets, wholesale central-bank money and subsequent transfers, with a secondary-market framework reportedly outside the conventional electronic book-provider platform.

This would be a coordinated market process, rather than simply a digital certificate. Whether the reported pilot ultimately delivered that design requires evidence beyond the plans described here.

Dematerialisation, wallet control and ownership answer different questions

Dematerialisation replaces paper certificates with electronic book entries; it does not require blockchain. Under the Indian depository framework described by NSDL, the depository is registered owner for effecting transfers, while the beneficial owner receives the security's rights and benefits. NSDL: Capital markets and depositories

The harder tokenisation questions concern programmable issuance, consistent ownership updates, conditional payment and delivery, compatibility with the legal framework, a stable identity across secondary trading, corporate actions and evidence available to regulators and market operators. A new database technology is useful only to the extent that it helps those functions interact correctly.

Consider a wallet displaying “REC Tokenised Bond; Quantity: 10,000”. That balance does not establish who the legal investor or beneficial owner is, whether the wallet is merely an interface to a depository record, or which record prevails in a conflict. Reviewers also need to know whether access can be lost without losing entitlement; whether errors can be corrected; how court orders, freezes, pledges and succession are handled; what happens after key compromise; how KYC maps to beneficial ownership; and whether conventional and tokenised holdings can coexist in the same security class.

Depositories need not disappear in that architecture. Their functions include book-entry records, ownership transfers, connections to issuers and intermediaries, participant access, corporate actions, operating rules, reconciliation and an authoritative record within the legal framework. If depositories develop the new wallet, they become part of tokenised infrastructure rather than being automatically displaced.

DvP connects the security to the cash, with a liquidity trade-off

The seller promises delivery and the buyer promises payment. Separate performance creates principal risk: one may deliver without receiving the other leg. Delivery versus payment links the two conditionally. The BIS has discussed DvP as a central tokenisation use case and the role of coordinated central-bank money and asset settlement. BIS: Tokenisation for the real world, BIS: Next-generation monetary and financial system

Using an external bank-payment process can still require messages, confirmations, reconciliation, intraday credit arrangements, settlement coordination and exception handling. A wholesale-CBDC leg could potentially bring payment itself into the executable process: settle security and cash together only when delivery is valid, money is available and both participants are eligible; otherwise do not settle.

Faster settlement can reduce counterparty exposure and reconciliation risk while reducing the opportunity to net obligations. Transaction-by-transaction DvP may require cash and securities at the moment of execution, increasing intraday liquidity and inventory needs relative to netted arrangements. The BIS identifies this trade-off. BIS: Future of securities settlement

Moving from T+1 or another deferred cycle toward near-instant settlement therefore requires rules for prefunding, liquidity buffers, securities availability, failed transactions, cut-offs, collateral mobility, queues, participant limits, outages and unwinding exceptions. Execution speed does not determine when the market should allow execution.

Legal finality and participant access need explicit governance

A technically difficult-to-reverse transaction is not automatically legally final. The governing framework must establish when a transfer takes effect, whether subsequent insolvency affects it, which record controls, and how fraud, error, court or regulatory freezes and reversals, pre-finality cancellation and recognition across systems are handled. A ledger can evidence a state change without determining its legal meaning.

Distributed infrastructure also needs someone authorised to write and validate records, map identities to accounts, correct errors, prevent forks or inconsistent states, manage outages and upgrades, retain records and bear responsibility for operational failure. A permissioned ledger remains governed financial infrastructure.

Reuters reported that later trades would require compatible CBDC and securities wallets. That is a participation condition as well as a technical design. Trading access, clearing membership, settlement-bank access, custody and beneficial ownership may belong to different parties. An asset manager might participate directly or through a bank; a custodian might control a wallet for a beneficial owner; brokers might enter trades without controlling settlement; another institution might sponsor access. Foreign-investor access, AML, sanctions, KYC and eligibility controls, and the consequences of losing eligibility while holding assets all need a defined answer.

These choices determine whether a pilot broadens access or creates another closed network. Neither wallet availability nor a blockchain entry should be treated as an independent finding that an investor may legally participate.

Secondary trading and corporate actions test the whole design

A transfer function alone is not a secondary market. The infrastructure must manage instrument and participant eligibility, orders and price formation, trade timestamps, surveillance and reporting, settlement instructions and failures, relevant position limits, custody and accounts, corporate-action entitlements, record retention and regulatory oversight. If trading moves outside a conventional platform, its functions must be replaced or connected to another authorised process.

Instrument identity must survive the movement from issuer to depository, venue, custodian, portfolio system and token platform. A proposed record would map issuer and instrument name, programme and tranche, ISIN or equivalent, token and depository identifiers, wallet position, controlling documents, outstanding principal, coupon and maturity, current holding and transaction history. The smart-contract address becomes a reference to the instrument, rather than a substitute for it.

A displayed balance of 1,000 units cannot explain what those units are entitled to receive. Issue and settlement dates, accrual periods, record and payment dates, business-day conventions, optional and mandatory redemption, covenants, ratings, amendments, defaults, acceleration, maturity and final redemption form part of the lifecycle. A partial repayment changes outstanding principal; an amendment should preserve the previous terms; coupon entitlement and payment need evidence; and a court stay or account freeze needs a lawful operating response.

Coupon processing must identify the entitled holder at the relevant record time, account for pending trades, choose the correct payment account or wallet, handle withholding and tax information, reconcile failed payments and retain evidence. Early redemption, consent solicitation, covenant waiver, partial principal repayment, restrictions and issuer default demand the same discipline. Immutability does not supply the business or legal rules for those events.

Evidence and interoperability give ledger history its meaning

Suppose an illustrative token record shows coupon: 7.25%; maturity: 30 September 2029; outstanding principal: ₹4.8 billion. A reviewer needs to know whether those terms came from final documents, whether maturity was amended, whether principal reflects partial redemption, which document controls, who reviewed the fields and when they were reconciled. Recording a value on a ledger does not establish that it was legally correct.

Offering documents, board resolutions, legal opinions, KYC and investor representations, tax records, rating materials, covenant certificates, notices, payment evidence and regulatory filings may remain outside the ledger. Some are sensitive, large, frequently updated, externally held or access-restricted. Practical architecture can combine authoritative ledger state, external legal documents, off-ledger repositories, hashes and references, identity and depository records, payment systems and audit logs. The relationship among them is what preserves provenance.

Interoperability then has to reach order and portfolio management, custodians, accounting, risk and collateral systems, data feeds, settlement, reporting and regulatory infrastructure. IOSCO identifies interoperability between traditional and DLT infrastructure as a practical challenge. IOSCO: Tokenization of Financial Assets

Different systems need consistent meanings for instrument identity, ownership, transaction and settlement state, cash movement, restrictions, corporate actions and authoritative records. This is more than a messaging format: conventional and tokenised instruments can coexist for the same issuer and investor while reviewers still need to understand their distinct custody and operating arrangements.

Programmable rules require authority and exception procedures

Smart contracts could potentially automate allocations, eligibility checks, DvP, coupon calculations and schedules, redemption, balances and reporting events. Every rule still comes from law, instrument terms or authorised operational rules. The implementation must specify permitted transferors, calendars and non-business days, rates, withholding, effective amendments, pause authority, default and any authorised override. The review question is who can define the rule and what evidence connects code to the current governing instrument.

Exception handling is part of that design. A holder can die, a fund merge, a custodian fail, a court issue an order, an issuer restructure, a payment have the wrong amount, credentials be lost or compromised, a node fail, a quantity be entered incorrectly or an upgrade introduce a defect. Procedures must address erroneous beneficial-owner records, sanctions, replacement credentials, injunctions, quarantining invalid transactions and recovery from outages.

Pending, validated, settled, failed, frozen, reversed by authorised process, cancelled before finality, under dispute, redeemed and closed are different possible states. Neither automation nor an immutable history removes the need to identify the authorised correction and its evidence.

A proposed record around the token

An Asset Passport model for tokenised bonds should explain the instrument and supporting evidence. It should reference the authoritative depository, CBDC system, custodian, exchange or network wherever that external infrastructure controls the relevant state.

A ledger may answer who holds a position now, whether a transfer settled and which transaction changed a balance. The proposed evidence record adds what the instrument means, which documents create the rights, which restrictions apply, what external records support it, what changed and which statements remain unconfirmed. Those functions complement each other without making the Passport itself a securities register.

AI-assisted preparation can help organise legal documents and suggested instrument information for review. A future specialised reconciliation tool could compare final terms with fields, depository and wallet positions, trades and settlement, coupon notices and schedules, payments and entitlements, amendments and code parameters, identifiers and portfolio events. It could flag inconsistent principal, missing notices, unreconciled holdings, amended maturity, missing cash events, conflicting settlement states or an identifier attached to the wrong bond. Such comparisons are proposed capabilities, not an assertion that all are implemented in DaDepo.

AI does not independently determine record priority, legal finality, enforceable transfer, beneficial ownership, securities-law compliance, freezes, reversals or investor eligibility. DaDepo's bounded role is reviewable private preparation and documentary context. It does not thereby issue bonds or tokens, operate a blockchain, depository or exchange, act as owner, nominee or custodian, control securities or CBDC wallets, provide central-bank money, execute, clear or settle trades, authenticate every external entry, validate code as legally correct, establish title or priority, or guarantee interoperability, liquidity, price, payment, redemption or transferability. Any identified legal, financial, investment, tax, accounting, custody, depository, clearing, settlement, CBDC, token-issuance, smart-contract-audit or valuation service would need its own express and lawful basis.

Questions for a tokenised-bond review

Instrument and ownership

1. Instrument: What exact legal security does the token represent?
2. Issuer: Is the issuing legal entity unambiguous?
3. Terms: Are principal, coupon, maturity, currency and governing law supported by controlling documents?
4. Identifier: How does the token identifier map to the ISIN or other conventional security identity?
5. Authoritative record: Which system legally determines the current holding?
6. Ownership: Who is the registered owner and who is the beneficial owner where those concepts differ?
7. Wallet: What does control of the securities wallet legally mean?
8. Custody: Is a custodian, nominee or depository participant involved?
9. Restrictions: Which transfer, lock-in, investor-eligibility or jurisdictional restrictions apply?

Settlement and market operation

1. Cash leg: Which money or payment system settles the transaction?
2. DvP: Are security delivery and payment linked conditionally?
3. Finality: At what point is settlement legally final?
4. Liquidity: Does near-instant settlement require prefunding or additional intraday liquidity?
5. Failure: What happens if the security or cash leg is unavailable?
6. Secondary market: Where and how can the instrument trade after issuance?
7. Interoperability: How does the tokenised position connect to custody, accounting, risk and portfolio systems?
8. Corporate actions: How are coupons, redemptions, amendments and defaults reflected?
9. Exceptions: How are freezes, mistakes, key loss and legally authorised corrections handled?
10. Provenance: Can each material structured field be traced to the right document or authoritative system?
11. Lifecycle: Can a reviewer reconstruct every material state change from issuance to redemption?

The reported pilot matters because issuance, ownership, central-bank-money settlement and secondary transfer were being considered together. Faster processes raise the standard for instrument identity, participant and liquidity controls, record authority, corporate actions and the link between code and governing documents. The test is whether the market can operate on the same evidenced understanding of the asset, including what the token legally and operationally represents.

Further reading

• Reuters: India plans first tokenised bond issue in September, sources say
• SEBI: Speaking Notes at the 25th FIMMDA–PDAI Annual Conference
• Reserve Bank of India: Operationalisation of Central Bank Digital Currency-Wholesale Pilot
• Reserve Bank of India: Digital Rupee FAQs
• NSDL: Capital Markets and NSDL Overview
• Bank for International Settlements: Tokenisation for the real world
• Bank for International Settlements: The next-generation monetary and financial system
• Bank for International Settlements: On the future of securities settlement
• IOSCO: Tokenization of Financial Assets