India's Commodity Wealth Beckons Tokenization as VDA Industry Sees Global Growth

India's commodity wealth is being largely underutilized due to its inefficient paper-based trading system. Tokenization, which represents ownership of a real asset as a digital token on a blockchain, can help bridge this gap.

The virtual digital asset (VDA) industry has been driving the growth of tokenized commodities globally, with over $7.12 billion in monthly transfer volume across 3.2 lakh holders and more than 40 tracked products.

Gold-backed tokens dominate the market, with Paxos Gold and Tether Gold accounting for nearly three-quarters of it. These tokens give holders a claim on real gold held in audited vaults and are redeemable through the issuer.

India already has some groundwork laid for a blockchain-based tokenized commodity market, including Electronic Gold Receipts introduced by SEBI in 2021 and Electronic Negotiable Warehouse Receipts regulated by the WDRA. However, what's missing is the crypto layer that makes ownership tradeable in small fractions to a wider pool of investors.