The Securities and Exchange Board of India, a markets watchdog, has asked depositories to employ blockchain to record and monitor the creation of securities and covenants involving non-convertible securities, according to a report by Livemint.

Fast facts

  • SEBI formed a group in November to suggest ways to strengthen the process of creating and monitoring securities, monitoring asset cover and covenants involving non-convertible securities. Based on the recommendations of the group, SEBI has asked depositories to create a blockchain-based platform to monitor securities and covenants.
  • The platform will operate from April 1 next year. Testing of the system will start at the beginning of 2022.
  • The new system will be able to record interest and redemption payments on non-convertible securities and credit rating information, and enable the periodic monitoring of securities, covenants and asset cover. To enable timely updates by various stakeholders, system login credentials will be provided to all parties including security issuers, credit rating agencies and debenture trustees.
  • SEBI’s announcement comes at a time when the crypto community in India is on edge over an potential ban on all private cryptocurrencies. Although the government has made it clear that it does not intend to ban blockchain technology, the fate of the crypto ecosystem in India hangs in the balance until crypto legislation is unveiled.