India Proposes Interim Crypto Regulatory Mechanism via Industry-Led SROs

India's Parliamentary Standing Committee on Finance has proposed an interim regulatory mechanism to oversee the country's cryptocurrency market. The committee recommends establishing Self-Regulatory Organisations (SROs) to govern the domestic crypto and Virtual Digital Asset (VDA) market.

The current regulatory vacuum surrounding digital assets poses severe risks to retail investors, with millions exposed to operational, custodial, and fraud risks. To address this issue, the committee suggests empowering industry-led SROs to enforce standardized codes of conduct under the oversight of established regulators like the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI).

The proposed SRO framework would enable immediate deployment of binding rules governing consumer protection, platform transparency, and token disclosure standards. SROs would be tasked with auditing exchange reserves, segregating customer funds from corporate balance sheets, and setting up user grievance redressal channels to prevent insolvency collapses.