How SEBI’s SM REIT Framework Validates India’s On-Chain RWA Revolution

The Securities and Exchange Board of India (SEBI) introduced the Small and Medium Real Estate Investment Trust (SM REIT) framework in 2024, establishing a regulatory foundation that mirrors the operational requirements of smart contracts. By lowering asset value thresholds to ₹50 crore and mandating 100% cash flow distribution to unitholders, the framework creates a structured environment for fractional ownership. Although SEBI does not currently permit on-chain property title transfers, the existing requirements for KYC, segregated accounting, and automated payouts align with the logic of permissioned security tokens like ERC-3643. SEBI has already begun testing this integration through sandbox pilots, including a 2025 tokenized fractional-share offering for Reliance Industries. This regulatory evolution suggests that India is building the necessary compliance infrastructure to eventually transition from manual, paper-based processes to automated, blockchain-based real estate management. The model draws parallels to Dubai’s PRYPCO Mint, which integrates blockchain ledgers with government title registries to facilitate compliant fractional property investment. Ultimately, the SM REIT framework serves as a blueprint for digitizing Indian real estate, where compliance logic is embedded directly into the asset's code.