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India Panel Recommends Interim Crypto Self-Regulation, Classification
The finance panel's recommendations are non-binding but mark a formal acknowledgement of the regulatory gap. Industry executives see a three-bucket approach. Government response is next.
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India's Parliamentary Standing Committee on Finance has recommended an interim self-regulatory framework for virtual digital assets and asked for clearer rules on how crypto products should be classified under the proposed Securities Markets Code, 2025. The committee proposed creating a recognised self-regulatory organisation (SRO) operating under a designated regulator. It also sought clarity on how tokenised securities and crypto investment products should be treated under the new law.
The recommendations are non-binding. Industry executives said they mark the first formal parliamentary acknowledgement that the sector operates in a regulatory grey area.
“It’s an important signal, though not yet a shift in policy. It’s a shift in official acknowledgement,” Mudrex founder and CEO Edul Patel told Inc42.
India currently taxes income from VDAs at 30% and levies a 1% tax deducted at source on specified transfers above a threshold. Crypto exchanges and other VDA service providers must register with the Financial Intelligence Unit-India under the Prevention of Money Laundering Act framework. The country has not introduced a comprehensive law governing the sector.
SB Seker, head of APAC at Binance, called the committee’s observations a sign that policymakers are looking beyond compliance measures. “The Parliamentary Standing Committee’s recommendations signal a shift in the right direction towards a more comprehensive framework for the regulation of digital assets,” Seker said.
Industry executives argued that a single framework for all digital assets would not work. Patel said VDAs are not one asset class. He suggested three broad categories: tokenised securities and real-world assets such as equities, bonds and gold; payment-oriented assets such as stablecoins; and crypto-native assets such as Bitcoin and Ethereum. Under that approach, tokenised securities could fall under the Securities and Exchange Board of India, payment-oriented assets under the Reserve Bank of India, and crypto-native assets under a dedicated VDA framework supported by the proposed SRO.
WazirX vice president Rajgopal Menon said regulatory responsibilities should be assigned according to the nature of each activity, with coordination between regulators becoming more important as digital asset businesses expand across multiple segments.