Sebi Launches Demat 2.0 Pilot for Tokenized Corporate Bonds

The Securities and Exchange Board of India is piloting a tokenized bond settlement system. This initiative, known as Demat 2.0, integrates distributed ledger technology into corporate bond issuance. The pilot aims to redesign the ownership and settlement infrastructure without altering the legal nature of the security.

According to GN auto markets/bonds: corporate bonds, the new framework uses private, permissioned networks. Tokenized bonds retain their existing International Securities Identification Number and all contractual terms. The technology changes how assets are recorded and transferred, not what the bond legally represents.

Settlement mechanics shift to atomic delivery

The pilot introduces atomic Delivery-versus-Payment for corporate bonds. The securities leg and payment leg settle simultaneously through distributed ledger infrastructure. If one leg fails, the other does not settle, eliminating counterparty exposure during the settlement gap.

Issuers receive proceeds in Central Bank Digital Currency wallets. This integration links the Reserve Bank of India's digital currency directly to the bond settlement process. The funds leg connects to the securities leg through the same distributed ledger network.

Existing investor accounts remain unchanged

Investors do not need to open separate accounts for Demat 2.0. The system extends the existing demat account through the depository interface. No new Know Your Customer verification is required for participation in the pilot.

Depositories manage the private cryptographic keys on behalf of investors. Individuals do not operate specialized distributed ledger infrastructure or manage blockchain keys directly. The existing stock exchange platforms continue to handle price discovery and order execution.

Tokenized bonds retain current legal status

Tokenized corporate bonds remain securities under the Securities Contracts Regulation Act. All existing Sebi regulations apply to these digital instruments. The pilot does not create a new class of financial asset or a separate trading venue.