India’s crypto regulation debate gains momentum as a parliamentary panel recommends examining a comprehensive VDA framework and interim SRO-led regulation.
New Delhi, India’s cryptocurrency and virtual digital asset (VDA) sector has received a significant policy boost after the Parliamentary Standing Committee on Finance recommended that the government comprehensively examine the need for a dedicated statutory and regulatory framework for digital assets.
The recommendation, included in the Committee’s observations on the Securities Markets Code, 2025, could mark an important shift in India’s approach to cryptocurrency regulation. The panel has also suggested considering an interim regulatory mechanism through recognised self-regulatory organisations (SROs) operating under the supervision of a designated regulator.
Dilip Chenoy, Chairperson of the Bharat Web3 Association, described the recommendations as an important milestone for India’s evolving virtual digital asset regulatory framework.
Parliamentary Panel Identifies Regulatory Gap
The Committee has recognised that although the proposed Securities Markets Code uses a technology-neutral definition of securities, several categories of virtual digital assets may fall outside the legal definition of securities or derivatives.
However, these assets are increasingly traded and held as financial assets, displaying economic characteristics similar to traditional investment products. This creates a regulatory gap, particularly in areas such as market conduct, transparency, consumer protection, disclosure standards and grievance redressal.
The Committee’s position highlights the challenge policymakers face in developing rules that protect investors without restricting technological innovation.
India Already Has Crypto Tax and AML Rules
India’s crypto ecosystem is not completely unregulated. Virtual digital asset service providers are already subject to important requirements under the Prevention of Money Laundering Act (PMLA) and the Income-tax Act.
Registered VDA service providers must comply with anti-money laundering, reporting and tax-related obligations. These measures have strengthened oversight of crypto transactions and improved compliance requirements across the sector.
However, there is still no comprehensive regulatory framework specifically covering areas such as market operations, consumer safeguards, disclosures, operational standards and dispute resolution.
According to the Bharat Web3 Association, establishing clear rules in these areas could strengthen investor confidence and provide greater certainty to legitimate businesses operating in India.
Self-Regulation Could Become an Interim Solution
One of the most notable elements of the Committee’s recommendation is its proposal to explore an interim framework involving recognised self-regulatory organisations under regulatory oversight.
The proposed approach would not amount to unrestricted self-regulation. Instead, it could establish a co-regulatory model, under which recognised industry organisations operate according to standards defined and supervised by the designated regulator.
Such a framework could introduce common standards for governance, transparency, disclosures and investor protection while allowing the government time to develop a comprehensive statutory regime.
For the crypto industry, the model could provide a bridge between the current regulatory structure and a future dedicated VDA law.
Regulatory Clarity Could Support India’s Web3 Industry
The recommendations also arrive at a critical time for India’s digital asset industry. Regulatory uncertainty can push investors and businesses toward overseas platforms and jurisdictions operating outside India’s domestic regulatory perimeter.
A clearly defined framework could instead encourage compliant companies to operate within India, improve consumer confidence and attract greater institutional participation in the digital asset ecosystem.
For businesses that have already invested in meeting existing compliance requirements, greater regulatory clarity could also create a more level competitive environment.
India’s Global Crypto Role
India has become one of the world’s major markets for digital asset adoption and blockchain development. During its G20 Presidency, India also participated actively in international discussions surrounding crypto-asset regulation and global regulatory coordination.
A balanced domestic framework could strengthen India’s position in the global Web3 ecosystem by combining technological innovation with stronger consumer and financial safeguards.
What Happens Next?
The Parliamentary Standing Committee’s recommendations do not immediately create a new cryptocurrency law. Instead, they provide a basis for further deliberation by the government and policymakers.
The next stage will likely focus on how India can design a framework that addresses investor risks without unnecessarily restricting blockchain innovation and legitimate digital asset businesses.
For India’s crypto industry, the Committee’s recommendations represent an important development. A future-ready framework could potentially improve investor protection, market integrity, regulatory certainty and responsible innovation, while supporting the long-term growth of the country’s virtual digital asset economy.
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