Blockchain & Tokenization Regulations in India’s GIFT City
A Comprehensive Guide
With regulators opening doors to blockchain innovation, GIFT City, India’s first international finance and technology hub has emerged as a testbed for digital-led fintech, smart contracts, and asset tokenization. Here’s an in-depth look at the current framework and its implications for tech and legal professionals.
- GIFT City and IFSCA: The Regulatory Backbone
Situated near Gandhinagar, GIFT City houses India’s only Global Financial Services Centre (IFSC), governed by the unified International Financial Services Centres Authority (IFSCA). With a unique regulatory regime and legal structure, GIFT IFSC operates like an international jurisdiction, offering tax neutrality, relaxed capital flow restrictions, and a sandbox-like environment for innovation.
- Real-World Asset Tokenization Under IFSCA Oversight
In February 2025, IFSCA issued a consultation paper on “Regulatory Approach towards Tokenization of Real-World Assets,” inviting public input on everything from issuance and custodianship to secondary trading and settlement mechanisms. This set the groundwork for regulated digital exchanges, risk mitigation norms, and market governance for tokenized assets. These guidelines aim to define the structure of token issuance and redemption protocols, clarify custody frameworks, regulated vs. self-custody and establish governance, liquidity, and investor-protection norms. This positions GIFT City to host regulated platforms enabling real estate, art, aircraft, bonds, and other tokenized assets.
- Fintech Sandbox & Tokenization Incentives
IFSCA’s Fintech Incentive Scheme (Feb 2024) offers grants across innovation stages, including tokenized asset projects, smart contracts, and green fintech. It supports pilots and encourages foreign participation via sandbox environments. Additionally, the Gujarat state IT/ITeS policy 2022–27, launched within GIFT City, underpins blockchain adoption by promising infrastructure support and sectoral incentives.
- Institutional Participation & Financial Infrastructure
Several leading financial players have deployed blockchain solutions in GIFT. JP Morgan, Axis Bank, HDFC, ICICI, IndusInd, and Yes Bank are participating in USD Onyx transactions. Real estate tokenization initiatives platforms like Terazo are rolling out tokenized real estate investment products under regulatory sandbox regimes, while the new Infosys development centre emphasizes smart contracts, asset tokenization, and underlying tech.
- Key Legal & Compliance Takeaways
The IFSCA’s framework covers issuance, custody, governance, AML/KYC, cybersecurity, and dispute resolution, all designed to instil trust and align with global standards, while crypto trading remains outside scope, limiting activities to regulated asset tokenization and blockchain-based settlement.
GIFT City has carved out a niche as a globally regulated tokenization and blockchain experimentation hub. With well-defined legal parameters, sandbox backing, and institutional engagement, it stands poised to host real-world asset tokenization at scale. Lawyers, fintechs, and global investors eyeing cross-border innovation should leverage this framework to accelerate compliant, frontier finance solutions.