India Proposes Interim Crypto Watchdog Amid RBI Concerns

India's Parliamentary Standing Committee on Finance has proposed establishing a Self-Regulatory Organisation (SRO) to oversee cryptocurrencies and virtual digital assets as an interim measure.

The proposal comes just weeks after the Reserve Bank of India reiterated its concerns over crypto assets, citing risks to financial stability, monetary sovereignty, money laundering, terror financing, and tax evasion.

According to the committee's report, the SRO would operate under the supervision of either RBI or the Securities and Exchange Board of India (SEBI) and focus on investor safety, governance standards, transparency, disclosure requirements, compliance, segregation of customer funds, and mechanisms for addressing complaints.

The move aims to strengthen investor protection until a comprehensive legal framework is enacted. The committee has also recommended that the government consider the necessity of a separate statutory framework for cryptocurrencies, non-fungible tokens (NFTs), and decentralised finance (DeFi) tokens.