Notifications (August 2021)

THE SCOPE OF PERMITTED DEVICES UNDER TOKENISATION HAS BEEN EXPANDED BY THE RBI 

Authorized card payment networks were allowed to offer card tokenization services to any token requestor (i.e., third-party app provider) over mobile phones and tablets in 2019. The RBI has now broadened the scope of tokenization to cover consumer devices like laptops, desktops, wearables (wristwatches, bands, and so on), Internet of Things (IoT) devices, and so on. The permission to tokenize extends to multiple channels [e.g., contactless transactions based on Near Field Communication (NFC) / Magnetic Secure Transmission (MST), in-app payments, QR code-based payments, etc.] or token storage techniques (cloud, secure element, trusted execution environment, etc.). The authorized card networks are ultimately responsible for the card tokenization services they provide.

Tokenisation is the process of replacing actual card details with a unique alternate code known as a “token,” which must be unique for each card, token requestor, and device (hence referred to as “identified device”).

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AFTER THE SEBI RAISED CONCERNS, THE NSE BANNED MEMBERS FROM SELLING DIGITAL GOLD

By September 10, the National Stock Exchange (NSE) has instructed its members, including stockbrokers, to stop selling digital gold on their platforms. The directive comes after capital markets regulator Sebi revealed that some members are offering their clients a platform to buy and sell digital gold. The Securities and Exchange Board of India (Sebi) advised that the stated activity is in violation of the Securities Contracts (Regulation) Rules (SCRR), 1957 and that members should stop doing so.

The SCRR regulations prohibit all members from operating in any business other than securities or commodities derivatives, either as principal or employee, unless as a broker or agent with no personal financial liability. As a result, the NSE advised members to refrain from engaging in such behavior and to adhere to all regulatory requirements at all times. The Securities Contract (Regulations) Act 1956 does not include digital gold in the definition of securities. There is no way to determine whether or not a digital gold certificate is backed by physical gold. Digital gold was sold by some jewelers, such as Titan, and banks.

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