India’s regulatory landscape for virtual digital assets (VDAs) could be moving towards greater regulatory clarity. In its 36th report on the Securities Markets Code, 2025, the Parliamentary Standing Committee on Finance has proposed an interim regulatory structure for the VDA sector until a dedicated law is introduced. Although these regulations aren’t legally binding, they offer an indication of the direction policymakers may take as India continues to shape its approach to crypto regulation.
Highlights of the Committee’s Recommendations
- Establish an interim regulatory framework through recognized self-regulatory organizations (SROs) until dedicated VDA legislation is introduced.
- Bring SROs under the supervision of a designated regulator to ensure effective oversight and accountability.
- Introduce clearer legal classifications for VDAs, recognizing that different digital assets may have characteristics similar to securities, derivatives, or other asset classes.
- Clarify the regulatory treatment of crypto investment products and tokenized securities under the suggested Securities Markets Code.
- Include enabling provisions, within the Securities Markets Code, to accommodate emerging tokenized financial products as the digital ecosystem evolves.
- Bridge the current regulatory gap by creating a structured mechanism that supports innovation while strengthening investor protection and market integrity.
Also Read: Maharashtra Plans Blockchain Framework for Land Tokenisation
What Could This Mean for India’s Crypto Ecosystem?
The committee’s recommendations don’t introduce regulations immediately, but they indicate a growing emphasis on developing a structured regulatory framework for the VDA sector. Instead of focusing on restrictive measures, the report advocates a phased approach that balances innovation with necessary regulatory oversight. Should the government choose to adopt these recommendations, they could pave the way for greater clarity around the regulation of crypto exchanges, tokenised assets, and digital investment products. While these recommendations are advisory and require government approval before any policy changes take effect, they underscore the increasing focus on building a transparent, structured, and future-ready regulatory mechanism for India’s growing VDA ecosystem.
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