India proposes SRO-led interim crypto rules

TLDR

Indias finance committee has recommended interim crypto rules run by industry self-regulatory organisations (SROs), overseen by a regulator like SEBI or RBI, while a full crypto law is drafted.

1. The committee wants SROs to set conduct and investor-protection standards for virtual digital assets, under regulatory supervision, instead of immediately folding all crypto into securities law.
2. India would keep its current tax/AML only treatment for crypto in the short term, but add structured oversight for exchanges and tokenized products if the government adopts the proposal.
3. The next key signals are whether the government accepts SRO-led co-regulation, how SEBI/RBI divide roles, and how different categories of crypto assets are legally defined.

Deep Dive

1. What India Has Proposed

Indias Parliamentary Standing Committee on Finance recommends an interim framework where industry-led SROs supervise crypto activity, under a designated regulator such as SEBI or RBI.

In its 36th Report on the proposed Securities Markets Code, 2025, the committee advises against immediately bringing all cryptocurrencies under the new securities code, instead suggesting SROs set standards for governance, transparency, disclosures, investor protection, and dispute resolution under regulatory oversight, according to the committees interim regulatory framework recommendation.

The report reflects consultations with the RBI, tax authorities, IFSCA, local exchanges, and industry groups, and draws on approaches in the UK, Singapore, the US, and EU, arguing for a phased framework rather than waiting for a full standalone crypto law.

2. Impact On Crypto Users And Firms

The committee notes the governments current position: crypto-assets and virtual digital assets are presently unregulated in India, except for taxation, anti?money?laundering obligations, and reporting requirements.

An SRO-led regime would not instantly change tax or PMLA rules, but it could formalise how exchanges handle listings, disclosures, custody, and complaints, giving local platforms clearer guardrails and investors more standardised protections.

Crucially, the committee stresses that not all crypto assets should be treated the same; some may fit securities, others derivatives, and some need new categories, which will matter for how tokens and tokenized securities are marketed to Indian users.

3. What To Watch Next

Nothing changes until the government accepts and implements the committees recommendations, so the immediate focus is on the finance ministrys response and which regulator (SEBI, RBI, or IFSCA) is officially tasked with supervising SROs.

Key technical steps to watch include:

1. Legal definitions for different types of virtual digital assets in Indian law.
2. The recognition and licensing criteria for any crypto SROs.
3. Clarification on how tokenized securities and exchanges offering tokenized assets will be treated.

Until those are settled, India will remain in a transitional regime where crypto is taxed and monitored for AML, but broader market structure rules are still emerging.

Conclusion

Indias move toward SRO-led interim crypto rules signals a shift from unregulated, except tax/AML toward structured, co?regulated markets without committing yet to a single, sweeping crypto statute.

For crypto users and firms, the opportunity is more clarity and local legitimacy, while the risk is that detailed classifications and SRO standards could tighten access or raise compliance costs once the framework is fully defined.