India Seeks Balance in Crypto Regulation
India's virtual digital asset sector is in a regulatory bind due to a lack of comprehensive legislation governing the industry. While India recognizes VDAs under tax law and subjects them to anti-money laundering obligations, the country still operates without clarity on their legal status. Global conversations on VDA regulation have evolved rapidly, with jurisdictions such as the European Union, the United States, and Asia introducing licensing and consumer protection frameworks.
The question before India is no longer whether to regulate digital assets but how. To address this, policymakers can learn from international regulatory approaches that ensure legal certainty, proportionality, and consumer protection. These principles are reflected in legislation such as the European Union's MiCA Regulation and the United Kingdom's evolving framework.
A recognized VDA self-regulatory organization (SRO) operating under government supervision could establish baseline standards on custody, cybersecurity, listing and delisting protocols, consumer protection, grievance redressal, and law enforcement cooperation. This would bridge the gap between broad supervisory objectives and enforceable industry standards while the legislative process runs its course.
India's next step on digital asset policy should be measured not by how restrictive it is but by whether it creates a predictable, accountable, and innovation-friendly regulatory environment. A principles-based framework underpinned by an effective SRO offers the most practical path forward.