There is no single Indian law that approves or bans every tokenised asset. Whether a token is lawful and regulated depends on the rights it represents, the underlying asset, who issues or handles it, and how it is offered and transferred. Tax classification, anti-money-laundering duties, securities rules and property-transfer requirements answer different questions; meeting one does not establish compliance with the others.
What does the token actually give its holder?
Start with the enforceable right, not the label “tokenised.” A blockchain entry might represent a security, a contractual or beneficial interest, a collectible, a payment-like asset, or merely a record. Those arrangements are not legally interchangeable.
| What the token is said to represent | Key question to resolve |
|---|---|
| Shares, debt or another investment interest | What rights does the holder have, and does the instrument fall within securities rules? |
| A contractual or beneficial claim on an asset | Who owes the obligation, what documents create it, and what remedy can the holder enforce? |
| Direct ownership of land or another physical asset | Do the legally required conveyance and registration steps recognise the transfer, independently of the token entry? |
| A collectible, VDA or digital record without a clear link to an underlying asset | What does the holder own or control in practice, and what rights—if any—are enforceable against an issuer or platform? |
The answers may differ even for tokens that look alike or are marketed using the same term. The offer documents, issuer, custodian, transfer process and holder’s remedies all matter.
What does India’s VDA tax definition cover?
Section 2(47A) of the Income-tax Act defines a “virtual digital asset” to include specified electronically transferable information, code, numbers or tokens that represent value, as well as NFTs or similar tokens and other assets notified by the Central Government. The Income-tax Department’s official text, accessed on 7 October 2026, also includes a crypto-asset clause added by the Finance Act 2025 and effective from 1 April 2026.
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This is a tax-law classification. Being within the definition does not itself authorise an issue or trading venue, establish that an offer complies with securities law, validate a transfer of property, or show that a platform has regulatory approval.
When do FIU-IND and PMLA obligations apply?
FIU-IND’s guidance dated 4 July 2023 covers specified virtual digital asset service-provider activities when carried out for or on behalf of another person in the course of business. The listed activities include exchanging VDAs for fiat or other VDAs, transferring VDAs, safekeeping or administering them, and certain financial services connected with an issuer’s offer and sale of a VDA.
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A Ministry of Finance statement dated 9 September 2026 says VDA service providers operating in India, whether onshore or offshore, must register with FIU-IND as reporting entities when they carry out the specified activities and must meet PMLA requirements, including reporting and record-keeping duties. The statement says that “the Crypto products and NFTs are unregulated and can be highly risky.” That description should be attributed to the Ministry’s statement; it does not establish that every tokenised security or every blockchain record has the same status.
FIU-IND registration is an anti-money-laundering and reporting obligation for covered providers. It is not a product licence, SEBI endorsement, safety guarantee or proof that a particular token is lawful in every respect. FIU-IND lists later revisions to its VDA registration circular, so anyone relying on compliance details should check the current circular rather than assume the 2023 guidance is the latest version.
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Can securities rules apply to a tokenised investment?
Yes, depending on the instrument and its rights. A token that represents shares, debt, units or another investment interest may raise the same securities-law questions as the corresponding conventional instrument. Recording or transferring it on a blockchain does not, by itself, establish an exemption from ordinary requirements.
SEBI’s Issue and Listing of Non-Convertible Securities Regulations, 2021 page identifies an amendment dated 18 September 2024. Its Depositories and Participants Regulations, 2018 page identifies an amendment dated 30 April 2025; a 2025 SEBI consultation document also discusses dematerialisation requirements for certain private companies. These materials are relevant to the existing securities and market-infrastructure framework, but they do not establish a universal SEBI tokenisation approval route for every kind of asset.
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Does a token transfer ownership of Indian real estate?
Do not assume that minting or transferring a token transfers legal title to land. A token might purport to represent direct ownership, shares in a property-owning company, a contractual or beneficial interest, or only an entry on a platform’s ledger. Each arrangement raises different legal questions.
The official materials covered here do not settle whether any particular token effects a valid transfer under the applicable conveyance and state registration rules. A holder should examine the underlying documents and transfer structure, not treat the token as proof of title. For a specific property transaction, the relevant documents and state-law requirements need transaction-specific review by Indian counsel.
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The same approach applies to gold, bonds, receivables, carbon credits and collectibles: identify the legal interest, issuer, custodian, restrictions on transfer, relevant venue and activities of each intermediary. The word “tokenised” does not determine which rules apply.
What about offshore offers and cross-border transfers?
The rules for a particular offshore issuance, an Indian resident’s purchase, a foreign investment structure or a cross-border transfer cannot be resolved from VDA tax classification or FIU-IND registration alone. FEMA, foreign-investment and securities requirements may depend on who the parties are, what asset and rights are involved, and how funds and tokens move. Those facts require transaction-specific analysis.
Quick Recap
What should you check before relying on a token?
- Read the governing documents to identify the precise right attached to the token and the person or entity legally responsible for it.
- Establish who holds or controls the underlying asset, and what happens if the issuer, custodian or platform fails.
- Check whether the asset and offer raise tax, PMLA, securities, property-registration, foreign-exchange or other legal requirements; one classification or registration does not answer all of them.
- For property or another physical asset, verify the underlying conveyance, ownership records and applicable registration requirements rather than relying on a token transfer alone.
- For an actual offer or transaction, ask Indian counsel to review the rights, documents, parties, intermediaries and transfer route together.
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