1. Two Types of DLT Platforms - Licensing Depends on This

A. Permissionless DLT: Anyone can participate, validate. Example Bitcoin, Ethereum. Highly transparent, but regulators treat as high AML risk. RBI says it remains cautious about private cryptocurrencies but supports regulated uses of DLT and tokenization.

B. Permissioned DLT: Prior approval needed to participate. All Indian regulatory pilots are permissioned. Example: IBDIC MSME financing platform, SEBI corporate bond tokenization pilot which operates inside permissioned and regulator-backed environment overseen jointly by SEBI and RBI.

Permissioned is licensable, permissionless generally not licensable as infrastructure.

2. India - Current Position

India has no single DLT license, but a layer-wise approach:

a. RBI:

• 2017: RBI said it has not given any license / authorization to any entity to deal with Bitcoin or any virtual currency.
• 2018: RBI Circular prohibited banks from dealing in VCs.
• 2019: RBI Regulatory Sandbox - blockchain platforms listed as innovative technology allowed to test, but crypto and crypto asset services excluded.
• 2024-25: Fifth Regulatory Sandbox Cohort approved IBDIC as first authorized blockchain-based MSME financing platform in India. Signals RBI endorsement of permissioned blockchain.
• CBDC: Digital Rupee is only official virtual currency backed by government.

b. SEBI:
In 2025, SEBI to test tokenized corporate bond settlements in DLT pilot inside OECD Crypto-Asset Reporting Framework. Regulated testing, not public blockchain.

c. National Blockchain Framework (NBF):
Led by MeitY - use cases like tamper-proof land records 'Property Chain' and telecom DLT for SMS spam control under TRAI DLT platform licensing - every telemarketer must register on DLT.

3. Global Licensing Models

A. EU - DLT Pilot Regulation (EU) 2022/858 - Most Detailed Framework

A 6-year sandbox 2023-2029 allowing market infrastructures to temporarily deviate from CSDR/MiFID to test DLT.

3 license types:

1. DLT MTF - Multilateral Trading Facility: Only admits DLT financial instruments. Requires investment firm license + DLT MTF authorization.
2. DLT SS - Settlement System: Settlement of DLT instruments. Requires CSD license + DLT SS authorization. Can maintain securities register on DLT - exemption from CSDR.
3. DLT TSS - Trading and Settlement System: Combined trading + settlement. Requires both.

If entity does not have brokerage/regulated market/CSD license, it must apply to Financial Supervisory Authority for that license plus special DLT license.

Live case: Axiology applied to Bank of Lithuania for authorisation to operate DLT TSS under EU DLT Pilot Regulation - advised on licensing as operator of DLT TSS platform.

B. Switzerland - DLT Act Feb 2021
Created new license type: DLT Trading Facility - similar to MTF but allows trading between multiple parties without central counterparty, and allows custody. Made tokenisation easier.

C. Gibraltar - Since 2018
First jurisdiction with DLT regulation. Types under DLT license: crypto exchanges, wallet providers, custodian service providers, DLT based marketplaces. Focus: flexibility, protecting customer interests.

D. Malta
Technology Service Provider who provides service in relation to any DLT Platform certified by MDIA may seek registration.

E. USA
No federal DLT license. Two tracks:

• Money Transmitter License - state by state, FinCEN MSB
• NY BitLicense for virtual currency business
• If token is security - SEC registration required.

4. Key Case Laws

1. Internet and Mobile Association of India vs Reserve Bank of India, (2020 SCC Online SC 275) - Supreme Court of India, 4 March 2020 - Foundation Case for India

Facts: RBI 2018 circular prohibited banks from providing services to individuals/businesses engaged in cryptocurrency trading. IAMAI challenged under Article 19(1)(g) - freedom to practice profession/trade.

Held: Supreme Court struck down circular as disproportionate. RBI failed to demonstrate actual harm to regulated entities, no empirical evidence that VCs adversely impacted banking sector. Ban unsustainable.

Ratio: RBI did not endorse crypto as legal tender, but restrictions must have proportional justification. This reopened banking for crypto exchanges and paved way for DLT platform testing. Basis for all future DLT licensing arguments in India.

2. SEC vs Ripple Labs Inc., S.D.N.Y. 2020-2023 - US Leading DLT Token Case

SEC alleged Ripple's sale of XRP $1.3bn was unregistered securities offering. Issue: Is DLT token itself security?

Judgment 13 July 2023 by Judge Analisa Torres:

• Programmatic sales on exchanges where sellers don't know who's buying = NOT securities - XRP itself is not security when sold to retail on exchange.
• Institutional sales $728mn to sophisticated buyers pursuant to purchase agreements = Securities - violated Section 5 of Securities Act 1933.

Penalty Aug 2024: $125,035,150 civil penalty, far less than $2bn requested, plus permanent injunction from violating Sec 5.

Takeaway for DLT licensing: Same token can be security or not depending on mode of sale - crucial for DLT platform operator licensing - if you list token sold institutionally, you may be operating unregistered securities exchange.

3. High Court of Madras - Rhutikumari vs... (25.10.2025) - Crypto as Property

Madras HC recognised cryptocurrency as property capable of ownership and protection under Indian law while granting interim injunction under Sec 9 Arbitration Act. Transactions originated in Chennai involving Indian bank. Held disputes on crypto platforms remain private law unless statutory public law obligations exist. Gives property status needed for DLT platform to claim proprietary rights over tokens.

4. Delhi High Court - Taxation of VDAs Does Not Make Exchanges Subject to Public Law

Court reiterated taxation under Sec 115BBH does not make crypto exchanges subject to writ jurisdiction. DLT platforms remain private entities unless specific statute creates public duty. Important for licensing - cannot file writ against exchange for freezing, remedy is civil.

5. EU DLT Pilot - Regulatory Approach Cases
No court yet, but regulatory decisions: EU Pilot Regime allows MI to temporarily deviate from CSDR/MiFID obligations to test DLT. Exemptions are temporary and should not apply to DLT market infrastructure operating outside pilot. Means license is conditional and time-bound (6 years).

5. When Do You Need DLT License in India Today?