• India’s Securities and Exchange Board of India (SEBI) will launch a blockchain-based platform to monitor financial securities

  • SEBI, India’s securities regulator, is placing a large bet on distributed ledger technology (DLT) for the monitoring and recording of financial instruments beginning in 2022.

    SEBI Places a Bet on Blockchain Adoption

    The Securities and Exchange Board of India (SEBI) said yesterday (August 25, 2021) that it intends to implement a system for “system and covenant monitoring” of non-convertible debentures (NCDs) by April 1, 2022.

    SEBI’s move to accept blockchain technology signifies yet another significant step forward for the new technology’s adoption within the Indian financial industry. According to SEBI, the usage of DLT for financial products is predicted to boost system efficiency by a factor of ten.

    Debentures, for the uninitiated, are financial securities that acknowledge a debt obligation to the issuer. Normally, a debenture serves as a long-term loan instrument with the added characteristic of being redeemable into shares at the owner’s option at a later period.

    Similarly, non-convertible debentures are those that cannot be converted into shares.

    Furthermore, the suggested blockchain-based system will keep track of covenants, which are important provisions included in a loan deal, as well as the credit ratings of the NCDs.

    The system is expected to grant trustees, issuers, and credit rating organizations the necessary permission to alter transaction data. On the other hand, the data will be freely accessible to stock exchanges and depositories, allowing them to provide a more transparent process.

    SEBI stated in a statement:

    “Data will be cryptographically signed, time-stamped, and sequentially appended to the ledger, establishing a verifiable audit trail of transactions.” The ledger’s transaction history and data will be “completely” encrypted and shared only with relevant stakeholders on a “need-to-know” basis.

    Adding:

    “Because of its distributed design, which eliminates the single point of attack, DLT has the potential to deliver a more resilient system than traditional centralized databases and give better protection against diverse forms of cyber-attacks.”

    Adoption of Blockchain in India

    While cryptocurrency legislation are still being developed in India, the government has welcomed blockchain technology with open arms.

    On August 1, BTCManager revealed that the Indian government was developing a blockchain architecture to facilitate startup compliance.

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