India’s international financial services center (IFSC), Gujarat’s GIFT City, is readying to launch its first regulated tokenization platform for real world assets (RWA) in January 2024, the Times of India reported. India is positioning GIFT City as a competitor to Singapore and Dubai.
A spokesperson for GIFT City regulator, the IFSCA, said that the first tokenized asset class will be real estate, but art, aircraft and ships are on the agenda. “This will enable more foreign investors to fund development and other projects here,” the official said.
The team behind real estate development firm Collated has created a separate blockchain fintech, Terazo, to tokenize assets on the Poylgon blockchain. Terazo says it’s part of the GIFT City sandbox and it also provides a marketplace. GIFT City’s Alternative Investment Fund (AIF) is used to structure the investment.
Collated is collaborating with Indian construction firm Savvy Group on the first real estate tokenization venture where they plan to raise $7 million. It’s for a building within the Gift City Special Economic Zone (SEZ). However, access isn’t entirely open to retail investors. There is an approved list of eligible investee countries and a net worth minimum of $150,000. That’s a significantly lower hurdle than accredited investor criteria in other jurisdictions.
Shaan Zaveri from Tezaro and Collated observed that tokenization is happening in other Indian cities, but the investments are unregulated. He reiterated that it’s hard for foreign investors to access private markets and there’s a lack of liquidity. “Through Terazo, we intend to make the private market investing inclusive and frictionless,” he said. Secondary investors can invest as little as $1,000.
Tokenized cash
Meanwhile, tokenized cash is also being piloted in GIFT City. JP Morgan provided the tokenization solution through its Onyx JPM Coin blockchain-based bank accounts. The tokenized U.S. dollars are used to settle Rupee forex derivative contracts by five GIFT City banks. In this case, the key benefit is enabling dollar transactions 24/7 rather than just doing U.S. banking hours.
