India’s Parliamentary Standing Committee on Finance has proposed an interim framework led by a Self-Regulatory Organisation (SRO) to oversee cryptocurrencies and virtual digital assets (VDAs), as policymakers continue to examine how the sector should be regulated.

The proposal comes weeks after the Reserve Bank of India (RBI) reiterated its concerns about cryptocurrencies before the same parliamentary panel. While India taxes crypto activity and requires anti-money laundering compliance, the sector still does not have formal statutory status, leaving investors exposed to fraud and other risks. India has signalled interest in developing domestic crypto rules since hosting the G20 in 2023, when it championed a coordinated global approach and backed the IMF–FSB synthesis paper recommending comprehensive crypto regulation rather than outright bans.

Parliamentary Panel Recommends Transitional Crypto Oversight

On July 23, 2026, India’s Parliamentary Finance Committee submitted Report No. 36, recommending a transitional regulatory framework for crypto assets and VDAs. The committee said a recognised SRO should be established to supervise the industry until a comprehensive legal framework is enacted.

Under the proposal, the SRO would function under the oversight of either the RBI or the Securities and Exchange Board of India (SEBI). Its responsibilities would include investor safety, governance standards, transparency, disclosure requirements, compliance, segregation of customer funds, and complaint-resolution mechanisms.

The recommendation is intended to provide interim oversight while the government considers broader legislation for digital assets. It also seeks to clarify the treatment of VDAs, cryptocurrencies, tokenised securities, and crypto-linked investment products within India’s evolving regulatory structure. The SRO-led approach would mark a shift from the regulatory ambiguity that has persisted since India’s Supreme Court struck down an RBI circular in March 2020 that had prohibited banks from servicing crypto businesses, effectively leaving the industry to operate without a dedicated statutory authority.

Regulatory Gap Leaves Crypto Investors Exposed

The committee’s recommendations follow renewed warnings from the RBI, which has cited risks from crypto assets to financial stability, monetary sovereignty, money laundering controls, terror-financing prevention, and tax enforcement.

India currently imposes a 30% tax rate on cryptocurrency gains and a 1% tax deducted at source, or TDS, on certain transactions. Crypto businesses are also subject to anti-money laundering requirements. However, the industry still lacks a dedicated statutory framework governing how crypto assets should be issued, traded, marketed, or held by investors.

Despite that uncertainty, India’s crypto market has grown significantly. Estimates cited in the source range from approximately 39 million KYC-verified investors holding about ₹20,437 crore, or $2.4 billion, in assets as of mid-2026, to more than 119 million crypto owners.

Recent enforcement actions have also underscored the risks identified by the committee. In July 2026, the Enforcement Directorate investigated a ₹337 crore crypto scam involving alleged “Key Opinion Leaders” accused of misleading investors through discounted token schemes. Such cases support the committee’s call for an interim SRO-led framework designed to strengthen investor protection until comprehensive crypto legislation is introduced.

Committee Calls for Clarity on VDAs, NFTs, DeFi and Tokenised Securities

The panel also recommended that the government assess whether a separate statutory framework is needed for cryptocurrencies, non-fungible tokens (NFTs), and decentralised finance (DeFi) tokens.

It said future securities laws should remain technology-neutral so that tokenised securities issued or recorded on distributed ledger technology or blockchain networks fall within the appropriate regulatory scope without creating loopholes.

The committee further urged greater clarity in the legal definitions of VDAs. It also called for clarification on whether tokenised securities issued by cryptocurrency exchanges and crypto investment products would be covered under the proposed Securities Market Code.

In the near term, the Finance Ministry, RBI, SEBI, and FIU IND are expected to evaluate the committee’s recommendations and consider an SRO-led framework through regulatory guidance. If adopted, the proposal could strengthen India’s crypto oversight, improve investor protection, support tokenisation, and provide a foundation for broader digital asset legislation through 2026 and 2027. India’s approach is being watched alongside comparable frameworks such as the EU’s Markets in Crypto-Assets Regulation, which began phased implementation in 2024, as jurisdictions worldwide calibrate oversight for a rapidly expanding asset class.