INDIA: A recent BRICS roundtable on digital assets and tokenisation examined how emerging financial technologies could reshape cross-border payments, settlement and capital markets. Among the central themes was a question that extends beyond the development of individual central bank digital currencies: whether BRICS economies can build interoperable digital infrastructure capable of connecting different forms of money and tokenised assets across jurisdictions.
The roundtable, as reflected in the research and observations prepared by Koshy as a participant of the roundtable, covered on three broad principles. The first was the distinction between an asset and the infrastructure through which it moves. Tokenisation, in this view, goes beyond creating a digital representation of an existing asset. Its larger potential lies in connecting issuance, discovery, transfer, settlement, compliance and ownership verification through interoperable digital systems.
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The second principle was that interoperability could prove more important than the creation of another standalone platform. Drawing on experience with India’s Open Network for Digital Commerce, Koshy argued that open networks derive their value from common protocols that allow different marketplaces and service providers to interact rather than from concentrating activity on a single platform.
The third principle concerned the possibility of BRICS moving beyond separate national digital asset systems. Instead of focusing exclusively on which member develops the most advanced CBDC or stablecoin, the broader question is whether different forms of digital money and tokenised assets can operate across national systems while countries retain monetary sovereignty.
Three forms of digital money
The discussion also considered the evolving relationship between CBDCs, privately issued stablecoins and tokenised bank deposits.
A CBDC represents digital money issued by a central bank. Stablecoins, by contrast, are privately issued digital claims whose reliability depends on reserves, governance and regulatory arrangements. Tokenised deposits represent another model, in which commercial bank money operates through programmable digital infrastructure.
It was suggested that tokenised deposits could have particular relevance for institutional finance because they can potentially support programmable transactions, smart contract settlement and integration with tokenised securities.
JPMorgan’s Kinexys platform, which developed from JPM Coin, is an example of a bank-issued digital claim being used for institutional payments and foreign exchange settlement. From this perspective, the future financial system may involve several forms of digital money operating alongside one another rather than a single technology replacing the others.
The key challenge would then become interoperability between these systems.
Regulation remains a central challenge
Regulatory coordination emerged as another major issue. The argument presented at the roundtable was that regulation should focus primarily on the economic function of an asset rather than the technology used to create it.
Questions surrounding reserves, redemption, legal ownership, issuer failure, custody, client protection and anti-money laundering and know-your-customer requirements remain relevant regardless of whether an asset operates on a blockchain or another form of digital infrastructure.
The collapse of TerraUSD in 2022 is seen as an example of the risks involved when confidence in an asset’s underlying mechanism breaks down.
The European Union’s Markets in Crypto-Assets regulation, known as MiCA, is a significant attempt to establish common rules for crypto-assets and stablecoins. BRICS, however, does not currently have an equivalent unified regulatory framework, leaving individual member countries to develop their own approaches.
This creates a potential structural challenge for cross-border digital finance. Technology can operate across borders almost instantaneously, while financial regulation remains largely national.
From tokenised assets to tokenised transactions
The discussion placed particular emphasis on the evolution of tokenisation from individual assets to complete financial workflows.
The progression can be viewed as moving from digitising records to tokenising assets, then tokenising transactions and eventually integrating entire workflows. In such a system, tokenised securities, tokenised deposits, digital identity, compliance credentials and smart contracts could interact automatically.
At that stage, tokenisation would increasingly resemble financial market infrastructure rather than a separate crypto ecosystem.
Fractional ownership could further broaden access to assets, but the discussion also highlighted an important limitation: tokenisation alone does not create liquidity. A tokenised asset still requires buyers, sellers, custody arrangements and functioning markets.
The experience of open digital commerce can illustrate the point. Digitising a listing does not necessarily make it broadly discoverable if it remains confined to one platform. Similarly, tokenised assets could remain fragmented if investors cannot move efficiently between different platforms.
Governance as financial infrastructure
Governance was identified as one of the most important components of cross-border digital infrastructure.
While infrastructure is often associated with APIs, databases, protocols and blockchains, governance determines who can participate, who establishes standards, how protocols can be changed, how disputes are handled and how neutrality is maintained.
Project mBridge was cited as an relevant example. The multi-CBDC initiative involving central banks and monetary authorities from China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia demonstrated the potential for cross-border transactions using shared digital infrastructure.
The experience also illustrates that technical functionality does not automatically resolve questions surrounding governance, neutrality and institutional trust.
The broader argument presented at the roundtable was that an international financial network carrying property rights and financial value needs institutional neutrality as well as technical openness.
Interoperability involves more than technology
A functioning cross-border digital asset corridor requires several forms of interoperability.
These include legal interoperability so that ownership and transactions can be recognised across jurisdictions, regulatory interoperability covering areas such as AML, KYC and licensing, identity interoperability to establish who can transact, asset interoperability to define what is being transferred, and settlement interoperability to establish reliable finality.
Governance arrangements and investor and consumer protection would also need to operate across borders.
This makes cross-border digital assets not simply a payments-engineering challenge but a broader digital public infrastructure and financial governance challenge.
Faster settlement does not automatically mean deeper markets
Tokenisation could potentially reduce settlement periods and associated risks. Moving from traditional T+2 settlement toward T+0 could, for example, reduce the time during which counterparties remain exposed to settlement risk.
However, it is acknowledged that faster settlement alone does not guarantee better markets.
A proliferation of incompatible tokenisation platforms could instead fragment liquidity. Investors may have faster transactions but fewer opportunities to trade if assets become locked into separate ecosystems.
For capital markets, investors are likely to continue evaluating currency, counterparty, custody, liquidity, regulatory, jurisdictional and technology risks alongside the potential benefits of tokenisation.
A complex cross-border test
The challenges become more visible in a hypothetical transaction involving multiple jurisdictions. An asset could originate in India, be tokenised by an issuer in Singapore, purchased by an investor in the UAE, held by a custodian in Hong Kong and settled through a US dollar stablecoin, while trading on a secondary market elsewhere.
Such a transaction raises questions about governing law, ownership, custody, insolvency, taxation and investor protection at almost every stage.
Project Agorá, led by the Bank for International Settlements with participating central banks and private financial institutions, provides another model for examining these issues. Its approach seeks to explore tokenised cross-border transactions while maintaining domestic control over central bank money.
For BRICS, the discussion suggested that legal interoperability may ultimately prove more difficult and more important than technical interoperability.
The emerging idea of the Finternet
Ideas arising from Finternet was also placed as a possible framework for thinking about the future of financial infrastructure.
The idea was outlined in a 2024 paper by BIS General Manager Agustín Carstens and Nandan Nilekani following discussions associated with the G20. It envisages a financial system in which different networks can interact in a manner broadly analogous to how the internet connects separate networks.
Rather than focusing primarily on creating a new form of money, the concept places emphasis on enabling people and businesses to move different forms of financial value across interconnected systems.
The approach is closely associated with the broader principles of digital public infrastructure, particularly interoperability, open networks and user-centred design.
BRICS faces a strategic choice
The roundtable discussion pointed toward a strategic choice for BRICS economies.
National CBDCs, stablecoins and tokenised deposits are likely to continue developing independently. The larger question is whether these systems will eventually be connected through common standards or whether interoperability will have to be added later to systems originally designed as separate national or commercial platforms.
For BRICS, an interoperable model could potentially allow countries to retain monetary sovereignty while enabling tokenised securities, regulated digital money, identity credentials and compliance systems to interact across borders.
Such an architecture would require more than technological compatibility. It would require agreement on legal recognition, regulatory coordination, governance, dispute resolution and institutional trust.
The central message emerging from the discussion is therefore that the future of digital assets may depend less on which blockchain, CBDC or stablecoin becomes dominant and more on whether different systems can operate together.
For BRICS policymakers, the next phase of digital finance could consequently be less about building another isolated platform and more about establishing trusted, neutral and interoperable infrastructure through which different forms of money and value can move across borders.
Note: This does not represent a summary of the discussion at the roundtable and it does not claim to capture every point raised in the room. It is a compilation by the author based on his supporting research and peppered by his understanding of how the discussion went.
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