India panel backs self-regulation for crypto as RBI pushes ban

India's crypto market just got a clearer picture of its regulatory future, and it is not the ban the central bank wanted. A parliamentary committee has recommended that industry-run Self-Regulatory Organizations oversee the sector under the Reserve Bank of India or the Securities and Exchange Board of India, rather than the outright prohibition the RBI has pushed for.

The Parliamentary Standing Committee on Finance made the recommendation in its 36th report on the proposed Securities Markets Code, 2025, tabled in Parliament on July 23. The panel believes recognized SROs should enforce conduct standards while proper crypto legislation is drafted, a temporary solution for the 39 million KYC-verified users the RBI itself counted in the domestic market.

Those users hold roughly 20,437 crore rupees, about $2.4 billion, across 54 FIU-registered service providers, according to RBI data cited in the report. The committee studied the systems in the United Kingdom, Singapore, the United States, and the European Union before settling on the SRO model.

India currently has no statute recognizing digital assets as a formal asset class. What it does have is a 30% flat tax on crypto profits and a 1% tax deducted at source on transactions, plus anti-money-laundering reporting through the Financial Intelligence Unit. The Ministry of Finance told the committee that crypto-assets are outside India's regulatory purview except for taxation, AML, and reporting rules.

The recommendation comes weeks after the RBI pushed for a tougher line. The central bank told the same panel in May and June that it favors policy "leaning toward prohibition," wants banks barred from crypto exposure, and still keeps a ban on private cryptocurrencies among its options. The RBI argued that dollar-pegged stablecoins would interfere with India's monetary sovereignty.