Regulated digital asset tokenization at GIFT soon

Source: The Times of India

Ahmedabad: India’s first international financial services centre (IFSC) at Gift City in Gandhinagar will soon roll out regulated digital asset tokenization services. Asset tokenization is a concept that converts ownership rights of various assets into digital tokens formed using blockchain or distributed ledger technology (DLT). This means, instead of investing a huge chunk of money in an asset – say a real estate project or shares or gold – one only invests a fractional amount using asset tokens, which are tradeable.

While asset tokenization is offered by the US, France and Switzerland among others, this is the first time when GIFT-IFSC enables its launch in India in a regulated manner. Assets that can be tokenized include collectibles, art works, employee stock options (ESOPs), intangible assets, precious metals, and luxury objects.

Through a regulated asset tokenization, GIFT-IFSC recently set the concept in motion. The announcement was first made earlier this year when the IFSC Authority (IFSCA) during the G20 meetings had hinted at working on a regulatory framework to implement asset tokenization. The first platform that will enable asset tokenization and trading will soon be operationalised by Terazo – a category-III alternative investment fund (AIF) launched by real estate major, Collated Ventures. The platform will be operationalised for trading by January 2024. 

Jaxay Shah, CMD, Savvy Group said, “Being the fastest growing economy in the world, investors from across the globe are eager to invest in India. The asset tokenisation which is expected to begin in GIFT-IFSC will provide a seamless platform to foreign investors to invest in domestic real estate projects with ease. This will further accelerate infrastructure development in India with easy availability of liquidity.” Terazo has launched India’s first tokenized security offering regulated by IFSCA, India under the regulatory sandbox framework with a corpus of $7 million. “The first digital asset available for tokenization will be a commercial real estate project in GIFT SEZ, which will be jointly executed by the Savvy Group and Collated Ventures. The estimated project size is around 8.50 lakh sq ft and the cost is expected to be at Rs 400 crore. AIF will raise about Rs 60 crore ($7 million) through asset tokenization. Under this project, office spaces in the commercial building (a real estate asset) can be traded through digital tokens,” explained a source privy to the development.

“There are some domestic asset tokens in other cities of the country, but they are not regulated. At present, traditional private markets are not accessible to foreign investors due to entry barriers. On the other hand, lack of liquidity is stalling infrastructure development here. Through Terazo, we intend to make the private market investing inclusive and frictionless through its regulated asset tokenization platform for global investors,” explained Shaan Zaveri, promoter, Collated Ventures and Terazo. 

Secondary investors can participate with at least $1,000 on Terazo’s marketplace. There is no cap on the number of tokens traded independently.