India’s GIFT City gears up for real-world asset tokenization

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As tokenization grips global financial systems, GIFT City, a smart city in India’s Gujarat, has announced plans to establish a regulated platform for tokenizing real-world assets.

GIFT City’s financial regulator, the International Financial Services Center Authority (IFSCA), announced that the tokenization platform will leverage blockchain to merge Web 3 with traditional finance.

Located in the International Financial Services Centre (IFSC), the IFSCA notes that the move will put the smart city in the same league as Dubai and Singapore. However, it’s worth noting that tokenization is still in its infancy in India’s financial ecosystem, with regulators wary of introducing blockchain into mainstream finance.

As a way around this debacle, the IFSCA will be proceeding with a regulatory sandbox to experiment with its tokenization platform. The regulator pointed out that the ambitious plan will begin with tokenizing real estate before diversifying into other financial and real-world assets.

“To begin with, asset tokenization will be launched for real estate assets, and going forward, other asset classes such as artworks, ships, and aircraft, among others, will be included,” said one IFSCA official. “This will enable more foreign investors to fund development and other projects here.”

Real estate developer Collated Ventures will have the first tokenization offering through its blockchain subsidiary Terazo. According to the official disclosure, Terazo will tokenize real-world financial assets on Polygon, seeking to raise $7 million to construct a building in GIFT City.

The plan to raise $7 million will not be open to retail investors; instead, participants will be drawn from a previously approved list with a minimum investment threshold pegged at $150,000, according to reports.

Uniform standards will improve tokenization in India

Shaan Zaveri, an executive at Collated Ventures and Terazo, said under the regulatory radar, asset tokenization is already taking place in India, leading to uneven ecosystem development.

The executive disclosed that the decision to pursue full government regulation would open the floodgates for more entities to play by the book.

“There are some domestic asset tokens in other cities of the country, but they are not regulated,” said Zaveri. “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.”

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