India’s latest tokenization experiment is notable because it does not treat the security and the payment leg as separate modernization projects. On September 10, 2026, the Securities and Exchange Board of India announced the successful launch of Demat 2.0, a pilot for issuing, holding, trading, and settling corporate bonds as native digital tokens on a private, permissioned distributed ledger owned by the depositories.
The design goes further than putting a bond on distributed-ledger technology. Demat 2.0 connects the tokenized bond infrastructure to the Reserve Bank of India’s wholesale central bank digital currency, e₹, through the RBI’s Unified Market Interface. SEBI says this enables atomic settlement, with the bond and the money moving together. That pairing makes the pilot a test of tokenized market settlement infrastructure rather than a securities-only technology upgrade.
The First Phase Has Already Moved Real Corporate Bonds
SEBI says three issuers had completed tokenized bond transactions by the September 10 announcement. REC Limited raised ₹500 crore from 18 investors on September 7, L&T Limited raised another ₹500 crore from four investors on September 9, and IIFL raised ₹25 crore from one investor the same day. Together, the first transactions totaled ₹1,025 crore.
Those figures establish that the issuance and initial settlement workflow has been used with real securities and real value. They do not show that India now has a deep secondary market for tokenized corporate bonds. SEBI says the first phase remains focused on issuance, while later phases are expected to extend to buying and selling through existing Request for Quote platforms and eventually to retail access.
Why Pair the Bond With Central-Bank Money?
A securities trade contains two economic legs. The buyer receives the security, and the seller receives payment. Delivery-versus-payment links those transfers so one side does not complete while the other fails. The Bank for International Settlements has long treated DvP as a core way to reduce principal risk in securities settlement, and its more recent tokenization work argues that programmable infrastructure can make the relationship between asset delivery and payment more direct.
India’s choice of wholesale CBDC is therefore consequential. Instead of using a privately issued stablecoin or another settlement token, the pilot anchors the cash leg in central-bank money. That can strengthen blockchain settlement finality by keeping the settlement asset tied to the central bank rather than adding a separate issuer, reserve, or redemption layer.
Atomic settlement does not remove every risk. Operational failures, erroneous instructions, access controls, smart-contract errors, network availability, and the credit risk of the bond issuer still matter. What it can change is the sequencing problem between delivery and payment.
The Bond’s Legal Identity Is Supposed to Stay Intact
SEBI is explicit that Demat 2.0 changes the technology, not the legal character of the security. A tokenized corporate bond remains a corporate bond under the existing securities framework. The issuer’s repayment obligation is unchanged, investor rights are unchanged, and requirements involving credit ratings, debenture trustees, listing, and disclosures continue to apply.
Investors also use their existing demat accounts rather than opening a separate securities account or completing fresh KYC. They enable Demat 2.0 through the depository and need access to a participating bank’s wholesale-CBDC wallet for the funds leg.
That makes the pilot an example of institutional blockchain infrastructure being inserted into an established depository framework instead of replacing that framework. The ledger is owned by the depositories, and the token itself is the bond rather than a loosely linked representation issued outside the regulated market structure.
Asset Servicing Is Part of the Experiment
The pilot also reaches beyond issuance. SEBI’s FAQs describe the use of smart-contract functionality for servicing processes such as interest payments and redemption. That matters because a bond remains operationally active long after it is issued.
A useful way to view Demat 2.0 is therefore as a lifecycle test: issuance, ownership recording, transfer, settlement, coupon servicing, and redemption. If those processes can be coordinated within regulated infrastructure, tokenization may reduce some handoffs and reconciliation work without changing the investor’s underlying legal claim.
Atomic Settlement Does Not Create Bond-Market Liquidity
The distinction between settlement efficiency and liquidity should remain clear. A transaction can settle atomically and still involve a security with limited buyers, wide spreads, shallow market depth, or infrequent trading. Faster settlement cannot create demand.
SEBI’s plan to use existing RFQ platforms in later phases reinforces that point. Secondary-market liquidity will still depend on dealer participation, investor demand, executable quotes, market depth, and price discovery. The pilot may reduce settlement frictions, but digital asset liquidity risk does not disappear simply because ownership and payment can move together.
That is also why the first ₹1,025 crore of issuance should not be read as proof of an active secondary market. The more difficult test will come when tokenized bonds begin trading among a broader set of participants.
India and DTCC Are Taking Different Starting Points
India’s architecture provides an instructive contrast with the emerging U.S. model. Demat 2.0 pairs the tokenized security directly with wholesale central-bank money. DTC’s planned U.S. Tokenization Service, by comparison, initially allows tokenized entitlements to move between registered wallets free-of-value, while separate DvP use cases have been demonstrated in controlled production activity.
Neither approach is inherently a final blueprint. The comparison shows that regulators and market-infrastructure providers are experimenting with different ways to connect asset records, cash settlement, custody, and existing legal structures rather than converging immediately on one universal design.
The Kenson Perspective: Settlement Design Is Becoming Part of Tokenization Strategy
Kenson Investments views Demat 2.0 as an example of how institutional tokenization strategy increasingly depends on the settlement asset as much as the tokenized security. Putting the asset on a programmable ledger answers only one part of the market-infrastructure problem.
The more complete questions are who maintains the authoritative ownership record, what money settles the trade, when settlement becomes final, how corporate actions are serviced, and whether secondary-market liquidity is actually present. Those questions are central to institutional market structure analysis across tokenized markets.
Watch the Secondary-Market Phase
Demat 2.0 has already shown that tokenized corporate-bond issuance can be connected to wholesale CBDC inside India’s regulated depository system. The next phase should reveal more about trading behavior, liquidity, interoperability, and whether the model can scale beyond a controlled set of institutional participants.
Readers can explore Kenson Investments’ education on security tokens and real-world assets or contact Kenson Investments to follow how settlement design, custody, and market structure are evolving across institutional tokenization.
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