RBI’s Vasudevan flags legal, privacy, interoperability risks in tokenization
Reserve Bank of India (RBI) Executive Director P. Vasudevan highlighted critical challenges for the nation's tokenization roadmap, including legal uncertainty, data privacy, and the necessity for platform interoperability. Speaking at the Global Fintech Fest 2026, Vasudevan emphasized that while tokenization offers faster transactions and increased leverage, it introduces potential risks to financial stability that require careful regulatory oversight. The RBI has already successfully tested tokenization through its Unified Markets Interface, processing approximately ₹17,000 crore in certificate-of-deposit transactions. Recent milestones include pilot corporate bond issuances by REC and Larsen & Toubro, each raising ₹500 crore using a blockchain-based 'DEMAT 2.0' system. These pilots utilize the RBI’s wholesale central bank digital currency for settlement, aiming to reduce risks and automate the bond lifecycle. Vasudevan noted that existing market intermediaries like depositories and custodians must evolve into token service providers to support this transition. Ultimately, the RBI remains optimistic about expanding tokenization to diverse asset classes while maintaining a cautious approach to systemic stability.
- RBI processed ₹17,000 crore in certificate-of-deposit transactions via the Unified Markets Interface.
- REC and Larsen & Toubro raised ₹500 crore each in pilot tokenized corporate bond issues.
- Tokenized bond pilots utilize wholesale CBDC and a blockchain-based 'DEMAT 2.0' securities wallet.
- RBI identifies interoperability, legal clarity, and data privacy as primary hurdles for scaling.
The Reserve Bank of India (RBI) is the central banking institution responsible for India's monetary policy and financial system regulation. It has been actively exploring blockchain technology and central bank digital currencies (CBDC) to modernize market infrastructure. The 'DEMAT 2.0' initiative represents a shift toward digital-native securities, aiming to replace traditional paper-based or centralized electronic ledger systems with distributed ledger technology for faster, more transparent settlement.