Parliamentary Panel Endorses Interim Crypto Regulation Framework for India

The Parliamentary Standing Committee on Finance has made significant recommendations for India's crypto sector, which may signal a shift towards a more comprehensive regulatory framework.

Industry executives believe that these recommendations acknowledge the regulatory vacuum surrounding cryptocurrencies and could lay the groundwork for a broader regulatory framework. However, they also caution that the committee's proposals do not change India's existing regulatory framework.

The committee has recommended creating an interim self-regulatory organisation (SRO) to oversee virtual digital assets (VDAs), which would operate under a designated regulator. This SRO would be responsible for prescribing membership standards, mandating disclosures and audits, suspending non-compliant platforms, and operating an effective grievance redressal mechanism.

Industry stakeholders argue that different categories of digital assets should be regulated based on their economic function rather than through a one-size-fits-all framework. They propose classifying VDAs into three buckets: tokenised securities and real-world assets, payment-oriented assets, and crypto-native assets.