Indian Crypto Policy Shifts Towards Interim Regulation

India's crypto policy debate has taken a significant turn as the Parliamentary Standing Committee on Finance recommends an interim regulatory mechanism for cryptocurrencies and virtual digital assets through recognized self-regulatory organizations (SROs) operating under statutory supervision.

The recommendation aims to address the current compliance-heavy but structurally incomplete regime in India's crypto sector, which lacks a dedicated operating framework covering licensing, custody standards, product classification, investor protection, market conduct, and dispute resolution.

The committee suggests that SROs would not amount to full legal recognition of all VDAs as securities but rather provide a temporary governance layer while a comprehensive digital-asset law is developed. This approach acknowledges the varied nature of VDAs, which may require different regulatory treatment based on their characteristics.

Industry executives have welcomed the prospect of moving beyond a policy framework dominated by taxation and enforcement, with the central question now being how an SRO would be constituted, what powers it would have, and which regulator would supervise different asset classes.