India’s cryptocurrency industry has welcomed a parliamentary panel’s recommendation for an interim regulatory framework for Virtual Digital Assets (VDAs) through self-regulatory organisations, calling it a major step toward regulatory clarity and investor protection.

Crypto Industry Backs Parliamentary Panel’s VDA Regulation Proposal, Seeks Clearer Legal Framework

New Delhi: India’s cryptocurrency industry has welcomed the Parliamentary Standing Committee on Finance’s recommendation to introduce an interim regulatory framework for Virtual Digital Assets (VDAs) through self-regulatory organisations (SROs), describing it as a significant step toward reducing regulatory uncertainty while encouraging innovation.

Industry leaders said the proposal strikes a balance between fostering technological growth and strengthening investor protection, market integrity, and regulatory oversight.

Parliamentary Panel Recommends Interim Regulatory Framework

In its 36th report on the proposed Securities Markets Code, 2025, presented on July 23, the Parliamentary Standing Committee on Finance recommended that recognised SROs oversee the crypto ecosystem under the supervision of a designated regulator until a comprehensive law governing digital assets is enacted.

The committee’s recommendations are aimed at creating a structured regulatory environment while allowing the digital asset sector to continue evolving.

No Blanket Classification of Cryptocurrencies as Securities

One of the report’s key recommendations is that cryptocurrencies should not be automatically classified as securities.

The committee noted that the digital asset ecosystem is diverse, with different categories of crypto assets sharing characteristics with securities, derivatives, payment instruments, or other financial products. As a result, it recommended a more nuanced legal framework rather than a one-size-fits-all regulatory approach.

Clearer Legal Categories for Virtual Digital Assets

The panel also proposed introducing clearer legal classifications for VDAs to provide greater certainty for businesses, investors, and regulators.

According to the report, the framework should:

• Establish distinct legal categories for different types of digital assets.
• Clarify the regulatory treatment of crypto investment products.
• Define rules for tokenised securities and similar digital financial instruments.
• Include enabling provisions in the proposed Securities Markets Code to accommodate future tokenised financial products and emerging technologies.

Industry stakeholders believe such clarity would encourage responsible innovation while improving regulatory compliance.

Industry Sees Positive Step for Innovation and Investor Protection

Representatives from the cryptocurrency sector have described the recommendations as a practical approach to addressing the regulatory challenges faced by the industry.

They said an interim framework supervised by recognised SROs could improve governance standards, promote transparency, and strengthen investor confidence without slowing innovation.

The proposal is also viewed as a way to provide businesses with greater regulatory certainty while Parliament considers a comprehensive digital asset law.

Why It Matters

India’s cryptocurrency sector has operated amid evolving regulations and legal uncertainty for several years. A structured interim framework could help establish clearer compliance standards, improve market oversight, and protect investors while allowing policymakers time to develop a dedicated legal regime for digital assets.

The recommendations also reflect a growing recognition that digital assets encompass a wide range of products requiring tailored regulation rather than a single legal classification.

Conclusion

The Parliamentary Standing Committee on Finance’s recommendations mark an important milestone in India’s evolving approach to regulating virtual digital assets. While the proposals are advisory and would require further policy action before implementation, they have been widely welcomed by the cryptocurrency industry as a constructive step toward a more transparent, innovation-friendly, and investor-focused regulatory environment.

Frequently Asked Questions (FAQs)

What did the parliamentary panel recommend?

The panel recommended introducing an interim regulatory framework for Virtual Digital Assets through recognised self-regulatory organisations operating under the supervision of a designated regulator.

Did the committee recommend treating all cryptocurrencies as securities?

No. The committee advised against automatically classifying cryptocurrencies as securities, stating that different digital assets require different legal treatment.

What are Self-Regulatory Organisations (SROs)?

SROs are industry bodies that establish and enforce standards for their members while operating under the oversight of a government-designated regulator.

Why is the proposal significant?

The recommendations aim to reduce regulatory uncertainty, improve investor protection, enhance market oversight, and support responsible innovation in India’s digital asset ecosystem.

Are these recommendations law?

No. The committee’s report contains recommendations that would require further consideration and action by the government and lawmakers before becoming part of the legal framework.

Key Takeaways

• The Parliamentary Standing Committee on Finance has proposed an interim regulatory framework for Virtual Digital Assets.
• The panel recommends recognised self-regulatory organisations operate under a designated regulator’s supervision.
• The committee advised against automatically classifying all cryptocurrencies as securities.
• It called for clearer legal classifications for different categories of digital assets and tokenised financial products.
• India’s cryptocurrency industry has welcomed the recommendations, citing improved regulatory clarity, investor protection, and support for innovation.