Guidelines on Asset Tokenization by the Telangana State Government dated December, 2023

Posted On - 30 December, 2023 • By - King Stubb & Kasiva

Representation of real-world assets such as real estate, art or securities as digital tokens on blockchain is known as “Asset tokenization”. Telangana government has collaborated with the industry partners to launch guidelines on asset tokenization, with the aim to protect the investors and consumers while allowing the industry to grow and innovate. This step taken by the government will allow these assets to be traded and exchanged more easily and effectively.

Blockchain technology provides a transparent record of transactions and ownership, increasing trust and reducing fraud possibilities. It also helps in global reach by allowing investors from different parts of the world to participate in a project easily. The following is how asset tokenization works:

  1. Asset Issuance: The first step for tokenization includes the issuance of the asset on a blockchain or a distributed ledger through representation of a tangible or an intangible asset (or rights / obligations attached to it).
  2. Trading the asset: Once the asset is tokenized and issued on the distributed ledger the asset can be traded on the secondary security market.
  3. Compliance with rules and regulations: The tokenization process should adhere to relevant security laws and obtain all the required necessary licenses. It is essential to comply with the laws in the jurisdiction in which the asset is operating and the regulatory requirements specific to the asset before tokenizing any tangible or intangible asset.