Regulation: India opens a tokenization channel as Europe tightens one

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• SEBI’s Demat 2.0 pilot moved over $100 million in tokenized corporate bonds on distributed-ledger rails at launch.
• Depositories, not individual investors, hold the private keys controlling the tokenized bonds under the pilot’s current design.
• ESMA reiterated that binary options rules apply to event-contract platforms and questioned Polymarket’s and Kalshi’s partial EU geo-blocking.

Two regulators on opposite sides of the world pushed crypto-adjacent market structure forward this week, in very different directions.

In India, the Securities and Exchange Board of India opened a pilot letting corporate bonds exist in tokenized form on distributed-ledger infrastructure, running alongside the country’s existing dematerialized securities system rather than replacing it. More than $100 million in bonds moved through the pilot at launch, a meaningful first-day volume for a program still in its testing phase. Under the current design, the depositories that already custody India’s demat holdings, not individual investors, hold the private keys controlling the tokenized bonds. That is a deliberate structural choice: it keeps custody inside the regulated intermediary layer investors and issuers already trust, rather than pushing retail participants into self-custody of cryptographic keys, a shift regulators in several markets have been reluctant to make in one step. SEBI’s official press release index is the primary channel where the regulator publishes updates on the pilot’s rollout.

The pilot fits a pattern SEBI has been building toward for some time: extending distributed-ledger technology into India’s securities infrastructure through controlled, bounded pilots rather than a market-wide mandate. If successful, tokenized settlement could shorten settlement cycles and cut reconciliation costs across India’s corporate bond market, an area Indian regulators have flagged as needing modernization given how much slower and more paperwork-heavy bond settlement has historically been compared with equities.

In Europe, the European Securities and Markets Authority took a more adversarial posture toward a different corner of the market: prediction platforms. ESMA reiterated that event-contract platforms fall under the bloc’s existing binary options product-intervention measures, rules originally built to restrict retail access to high-risk derivative-like products. ESMA’s own statement specifically named Polymarket and Kalshi, questioning whether the partial geo-blocking each platform applies to EU-based users is sufficient to keep them outside the EU’s authorization requirements, or whether EU residents can still access these markets through workarounds that make the geo-blocking largely cosmetic.

The distinction ESMA is drawing matters for how the rest of the industry reads it. A platform that blocks EU IP addresses but still allows EU residents to fund accounts through other means, or that geo-blocks only certain product types while leaving others accessible, may not satisfy regulators who are looking at substance over form. Prediction markets have grown fast enough over the past year that they have moved from a niche crypto product into something regulators in multiple jurisdictions now treat as a distinct asset class requiring its own rulebook, rather than folding it into existing crypto or gambling frameworks by default. Together, the two moves capture where crypto-adjacent regulation actually sits right now: not a single global direction, but two very different regulatory postures running in parallel, one opening a controlled channel for tokenized traditional assets, the other tightening the boundary around a fast-growing product that regulators worry has outrun the rules meant to govern it.