For BRICS, the Digital Asset Question Isn't Which Currency Wins. It's Who Writes the Rules.

 

Every debate about digital assets eventually collapses into the same framing: will central bank digital currencies win, or will private stablecoins? I want to resist that question, because it points BRICS economies at the wrong problem. The interesting issue in front of us is not which form of digital money prevails. It is whether the different forms on offer, CBDCs, stablecoins, tokenised bank deposits, can be made to work with each other across borders. That problem is not primarily technical. It is legal and institutional, and as a bloc BRICS is not yet organised to solve it.

Start by clearing up the taxonomy, because it changes what the argument has to be about. A central bank digital currency is simply digital central-bank money. A stablecoin is a privately issued digital claim whose credibility rests on the quality of its reserves, its governance and the regulation around it. A tokenised deposit is a third thing again: ordinary commercial-bank money delivered through programmable infrastructure, which lets it become atomic, machine-readable, and usable in smart-contract settlement. These are not three competitors racing toward one winning technology. They are three layers of a monetary system that could, in principle, coexist. The real question is whether they can become interoperable forms of settlement rather than three separate, closed ecosystems each optimising for itself.

The same clarity is missing from how we talk about regulation. The instinct has been to regulate the technology, blockchain rails, tokens, wallets, when the more useful instinct is to regulate the economic function underneath it. If something performs a payment or settlement function, the questions that matter are old and familiar: who bears the risk if it fails, what backs the asset, can the holder redeem at par, who holds legal title to the reserves, how are client assets protected, how does AML and KYC actually work across the transaction. Technology moves globally and almost instantly. Financial regulation remains stubbornly jurisdictional. That mismatch, not block times or transaction throughput, is the structural problem cross-border digital assets actually face.

My years building India's Open Network for Digital Commerce taught me a lesson that generalises well beyond commerce: when you build an open network, the mistake is trying to build the biggest marketplace on it. The value sits in the protocol that lets many marketplaces, and many kinds of participant, interact on common terms. Applied to digital assets, the prize is not the best national CBDC or the most widely adopted stablecoin. It is the protocol layer that lets different forms of digital money and different tokenised assets interact across jurisdictions, without every pair of counterparties negotiating a bespoke arrangement from scratch.

Here is where most of the current conversation goes astray. Putting an asset on a blockchain is the easy part, and arguably the least consequential part. The hard part is building the legal, regulatory and settlement architecture around that asset so it holds up when the asset, the issuer, the investor, the custodian and the secondary market sit in five different jurisdictions. This is not hypothetical. Picture an asset originated in India, tokenised by an issuer based in Singapore, bought by an investor in the UAE, held by a custodian in Hong Kong, settled through a US-dollar stablecoin, and eventually traded in a secondary market somewhere else again. Every one of those legs raises a question that has nothing to do with cryptography: whose law governs ownership, transfer, custody, insolvency, taxation, investor protection and settlement finality. This is why I would argue legal interoperability matters more, in the end, than technical interoperability.

That argument rests on treating governance as infrastructure in its own right, not as a compliance afterthought bolted on to the technology. It is tempting to think of infrastructure as the visible layer, the APIs, the protocols, the databases, the blockchain itself. But the layer that actually determines outcomes is governance: who is allowed to participate, who sets the standards, who can change the protocol, how disputes get resolved, how neutrality is maintained, how incentives are structured. We have spent two decades getting reasonably good at making data interoperable. The next challenge, a considerably harder one, is making rights and value interoperable. A network that is technically open but institutionally captured, or institutionally absent, will not earn the trust that financial infrastructure requires. When the infrastructure in question carries property rights and financial value rather than product listings, governance stops being a nice-to-have and becomes the whole exercise.

None of this is an argument against tokenisation. It is an argument for sequencing it correctly. Tokenisation can genuinely improve accessibility, fractional ownership, distribution, transparency and settlement efficiency. Moving settlement from T+2 to T+0 can meaningfully reduce settlement risk. But multiply tokenisation platforms without a shared governance and legal layer underneath them, and the result is platform fragmentation and liquidity fragmentation instead of the promised efficiency gains. A tokenised illiquid asset is still an illiquid asset unless there is an ecosystem of buyers, sellers and interoperable venues around it. The danger ahead is not too little tokenisation. It is tokenisation proceeding faster than the interoperability layer that would let it function as an actual market rather than a collection of walled gardens.

The stakes rise further as the technology matures, because we are not simply digitising records anymore. The trajectory runs from digitising records, to tokenising individual assets, to tokenising entire transactions, to tokenising whole economic workflows: a tokenised security, a tokenised deposit, a digital identity credential, a compliance credential and a smart contract all interacting automatically to reach atomic settlement. At that point the system looks less like crypto and more like new financial market infrastructure. Every asset that can be tokenised can also be fractionalised, which is precisely why the governance question cannot be left until later. The more the workflow automates itself, the less room there is to fix a broken legal or governance layer after the fact.

This also reframes what serious capital actually prices. Investors weigh currency risk, counterparty risk, settlement risk, custody risk, liquidity risk, regulatory risk, jurisdictional risk and technology risk together, not settlement speed in isolation. Faster settlement does not automatically produce better markets if it arrives bundled with fragmented liquidity and unclear jurisdictional recourse. What institutional capital will actually reward is legal certainty, regulated custody, clear accounting and tax treatment, and enforceable interoperability, considerably more than it will reward a marginal improvement in settlement time. Nor does tokenisation replace traditional finance. Banks, exchanges, custodians, asset managers and market infrastructure providers all remain relevant; what changes is their role, as they move from being the entire transaction to being interoperable participants within it. The winner in this transition is unlikely to be the ecosystem that eliminates intermediaries. It is more likely to be the ecosystem that makes intermediaries interoperable.

This is where BRICS has a genuine opening that the current national CBDC conversations mostly miss. The instinct, understandably, is for each country to build its own system: its own CBDC, its own regulatory sandbox, its own custody rules. That instinct is not wrong on its own terms, monetary sovereignty is worth protecting, but it is insufficient on its own, because a collection of sovereign, non-interoperable systems produces exactly the fragmented outcome tokenisation was supposed to fix. The more ambitious version of BRICS digital-asset cooperation does not ask which member state builds the best CBDC. It asks whether BRICS economies can agree on shared standards for identity and KYC recognition, common frameworks for cross-border settlement finality, and workable governance for resolving disputes when something goes wrong across borders, all while every country keeps its monetary sovereignty fully intact. National CBDCs and tokenised deposits stay domestic. Regulated private stablecoins are free to coexist. Tokenised securities move across markets because the underlying legal and compliance architecture recognises them wherever they travel. No single country, and no single private platform, controls the network.

That is digital public infrastructure thinking applied to international finance rather than to domestic commerce, and it happens to play to a strength several BRICS economies already have relative to most Western financial centres. India, in particular, has already built and operationally proven open, interoperable digital infrastructure at national scale for identity, payments and commerce. That lived experience, more than any single country's crypto regulation, is the raw material for a BRICS approach to digital assets worth taking seriously.

The honest complication is that legal interoperability is far more politically difficult to negotiate than technical interoperability. Getting five or more sovereign regulators to agree on mutual recognition of custody, insolvency treatment and settlement finality is a slower, more contested process than agreeing on a messaging standard. But that is exactly why it is the more valuable thing to get right, and exactly why the work should start now, before each country's system hardens into an incompatible standard of its own. The window in which BRICS can shape this jointly, rather than reconcile five already-built systems after the fact, is not indefinite.

So the question worth putting to BRICS policymakers is not which country will have the best CBDC or the most credible stablecoin regime. It is whether the bloc is willing to do the harder, less visible work of building interoperable governance and legal recognition across its members, before technology forces a messier reconciliation later. We have become reasonably good, as an industry and as regulators, at making data move across borders. The next test, and the one that will actually determine whether tokenisation changes finance or simply relabels it, is whether we can make rights and value move across borders just as easily, without any one country or platform having to surrender control to get there.

In this context, the idea of the Finternet gives us a useful, consumer-centric framework for how this can evolve. The concept was proposed in a 2024 paper by BIS General Manager Agustín Carstens and Nandan Nilekani, following discussions at the G20 in Bengaluru, giving it a formal endorsement from the institution that sits at the centre of global central-bank cooperation. This has been since carried further through Networks for Humanity (NFH), a global nonprofit Nandan helped build that connects people, institutions and open networks around inclusive digital public infrastructure, with the Finternet as its core mission for the future of finance. The Finternet is not primarily about creating a new kind of money. It is about creating an open, internet-like infrastructure for the movement and exchange of value, where individuals and businesses, not financial intermediaries, sit at the centre, able to transfer any financial asset, in any amount, at any time, to anyone, anywhere. Carstens and Nilekani describe it as multiple financial ecosystems connecting with each other much as the internet connects networks, built on unified ledgers that make different forms of tokenised value interoperable by design rather than by bilateral negotiation. It is, in other words, the global equivalent of the DPI logic behind the argument above, aimed one layer further out, at the end user rather than the institution.

"It would be unfortunate if we ended up with a fragmented system and legal framework in which different digital currencies don't interoperate." - Agustín Carstens, General Manager, Bank for International Settlements, "Legitimacy, Privacy, Integrity, Choice: Towards a legal framework for central bank digital currencies," BIS Innovation Hub–FSI conference, Basel, 27 September 2023