What tokenisation means
To tokenise an asset is to create a digital token on a blockchain that represents ownership of, or a claim on, something in the real world. Instead of a paper certificate or an entry in a bank's private database, ownership is recorded on a public (or permissioned) ledger that can be transferred, divided, and settled in seconds, around the clock. The token is only as good as the legal structure connecting it to the underlying asset — that link is the whole game.
The assets being tokenised range widely: government securities like US Treasuries, corporate bonds, real estate, physical commodities like gold, private credit and loans, invoices, carbon credits, and even fine art and collectibles.
Why anyone bothers
Tokenisation promises several concrete improvements over traditional finance. Fractional ownership: a building or a gold bar can be split into thousands of tokens, letting small investors own a slice of assets previously reserved for the wealthy. Round-the-clock settlement: trades settle in minutes on-chain rather than days through layers of intermediaries. Accessibility: anyone with a wallet can potentially access assets and markets historically gated by geography or minimum-investment rules. Transparency and composability: tokenised assets can plug directly into DeFi — used as collateral for loans, traded on DEXes, or built into automated strategies.
The headline success so far is tokenised US Treasuries, where established financial firms have put billions of dollars of short-term government debt on-chain, offering crypto holders a familiar, yield-bearing, dollar-denominated safe asset.
The risks and the catch
RWAs introduce risks that pure crypto assets don't have. The biggest is the off-chain link: a token claiming to represent gold or a bond is worthless unless a real, legally enforceable structure guarantees redemption — which reintroduces the very intermediaries and trust assumptions crypto set out to remove. You're trusting the issuer, the custodian holding the real asset, and the legal system that would enforce your claim. There's also regulatory risk (tokenised securities are still securities, subject to securities law), counterparty risk, and the ever-present smart-contract risk. Tokenisation moves an asset on-chain; it doesn't make the underlying asset risk-free.
RWAs in India
India is an interesting RWA market in waiting: a large population, significant gold ownership, and growing fintech adoption. But the regulatory framework for tokenised securities and assets is still developing, and the interaction with existing securities, property, and foreign-exchange law is complex. For tax, any RWA token that meets India's Virtual Digital Asset definition would fall under the 30% flat tax and 1% TDS regime — though a tokenised security might instead be treated under securities tax rules, an unsettled question. The space is promising but early; anyone participating should watch both SEBI and RBI guidance closely and get professional advice.