Research & briefs
A Functional Taxonomy for Digital Assets in India
A four-pillar, risk-based classification — decentralised cryptocommodities (Bitcoin), tokenised securities, stablecoins, and utility tokens — on the principle that classification must precede regulation.
Presented at the GNLU Regional Stakeholder Consultation, Bengaluru, November 2025.
Presented · GNLU stakeholder consultation, Nov 2025
Why a taxonomy
- Digital assets sit under one umbrella term — 'crypto' — despite fundamental differences in risk, economic function, and technical architecture.
- Classification must precede regulation, so that rules can be proportional, protect consumers, and leave room for innovation. The primary differentiator is issuer-dependence.
The four categories
- Decentralised cryptocommodities (no issuer) — e.g. Bitcoin: no issuer, no cash-flow claims, commodity-like. Fit: commodity / payment-asset oversight, plus AML/KYC.
- Tokenised securities (issuer-dependent) — ICO and governance tokens, tokenised equity: an issuer and a profit expectation. Fit: SEBI; disclosures and anti-fraud norms.
- Stablecoins — fiat-backed or algorithmic: they touch the monetary system and carry reserve risk. Fit: RBI (reserves/payments), SEBI (backing assets), MeitY (tech).
- Consumer / utility tokens — loyalty, in-game, access: non-monetary, non-investment. Fit: light-touch, under MeitY and consumer-protection law.
Why it works
- It aligns with MiCA, the UK FCA, Japan and US principles.
- It reduces misclassification, supports innovation, and enhances consumer protection — by treating each kind of asset on its own terms.
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