India's Tokenization Bill and the Future of Middle-Class Wealth Creation

India's financial landscape is on the cusp of a seismic shift. The proposed Tokenization Bill 2025, introduced by AAP MP Raghav Chadha in December 2025, seeks to redefine access to high-value assets by enabling fractional ownership of real estate, infrastructure, and intellectual property through blockchain-based digital tokens. If passed, this legislation could democratize wealth creation for India's burgeoning middle class, mirroring the transformative impact of the Unified Payments Interface (UPI) on digital payments. By leveraging tokenization, the bill aims to unlock new investment corridors, reduce entry barriers for retail investors, and position India as a global hub for onshore asset innovation.

The Mechanics of Tokenization and Its Economic Potential

Tokenization-converting physical or intangible assets into digital tokens-offers a scalable solution to India's long-standing issue of asset illiquidity. For instance, a middle-class investor could purchase a fraction of a commercial office tower or a carbon credit project, bypassing the need for large capital outlays.

This model is not hypothetical: in Switzerland, the DLT Act has already enabled tokenized real estate and bond offerings, with the Swiss Financial Market Supervisory Authority (FINMA) granting the world's first securities token exchange license. Similarly, Singapore's Monetary Authority (MAS) has pioneered initiatives like "Project Guardian" to streamline cross-border tokenized transactions. These frameworks demonstrate how tokenization can lower costs, enhance liquidity, and expand market participation.

India's Tokenization Bill builds on this global momentum. By establishing a regulatory sandbox, the bill would allow startups and financial institutions to experiment with tokenized products in a controlled environment, mitigating risks while fostering innovation. Raj Kapoor of the India Blockchain Alliance argues that such a sandbox is critical to retaining India's economic sovereignty. Without onshore legislation, he warns, Indian assets could be tokenized in foreign jurisdictions, leading to a "leakage of domestic value creation." This is particularly urgent as global capital flows increasingly gravitate toward blockchain-based infrastructure, akin to the early internet's disruption of traditional communication.

Bridging the Wealth Gap Through Fractional Ownership

The bill's potential to empower middle-class investors is underscored by India's demographic and economic realities. With over 500 million people in the middle-income bracket, access to high-value assets like infrastructure or intellectual property has historically been restricted to institutional players. Tokenization could change this. For example, a $100 investment could grant partial ownership in a highway toll project or a renewable energy venture, generating passive income streams. This aligns with global trends: a 2023 study by Ken Research projects the global asset tokenization market to reach $1.5 trillion by 2030, driven by demand for liquidity and fractional access.

India's Corporate Laws (Amendment) Bill 2025, which recognizes fractional shares, provides a legal foundation for this transition. By enabling sub-unit ownership, the amendment paves the way for tokenization to integrate seamlessly into India's financial ecosystem. However, challenges remain. Regulatory clarity, investor education, and technological infrastructure must evolve in tandem to prevent market fragmentation and security risks.

Global Lessons and India's Strategic Position

The experiences of Switzerland and Singapore offer valuable lessons. Switzerland's Capital Markets and Technology Association has standardized security token issuance, while Singapore's MAS has prioritized cross-border interoperability. Both countries have seen increased retail participation in tokenized assets, with middle-class investors accessing previously exclusive markets. India's Tokenization Bill, if enacted, could replicate this success by creating a hybrid model that balances innovation with investor protection.

Critically, the bill's proponents argue that India's vast untapped asset base-ranging from urban real estate to rural infrastructure-positions it to become a global leader in tokenization. As Kapoor notes, "This is not just about technology; it's about redefining India's role in the next phase of global finance." By anchoring tokenization under Indian law, the country could attract capital from jurisdictions like Singapore and the UAE, which are already investing in blockchain-based financial ecosystems.

The Road Ahead

While the Tokenization Bill remains in the proposal phase, its momentum is undeniable. The Winter Session of Parliament in December 2025 saw the introduction of four major bills, though the Tokenization Bill was not among them. This delay underscores the need for sustained advocacy from both policymakers and industry stakeholders. Meanwhile, the regulatory sandbox framework proposed by Chadha could serve as a pilot to test tokenization's viability before full-scale implementation.

For middle-class investors, the stakes are high. Tokenization has the potential to transform India's wealth creation narrative, enabling broader participation in asset classes that were once the domain of the elite. However, success hinges on the government's ability to balance innovation with regulation, ensuring that the benefits of tokenization are equitably distributed.

As the global financial system pivots toward decentralized models, India's Tokenization Bill represents more than a legislative milestone-it is a strategic investment in the future of inclusive growth.