India's Parliamentary Finance Committee called for a comprehensive regulatory framework for crypto and other Virtual Digital Assets. The committee flagged a "regulatory grey area" that currently exposes investors to fraud and market manipulation risks. It explicitly proposed interim oversight by SROs, under either the RBI or SEBI.
How We Got Here
The Parliamentary Committee’s report on the proposed Securities Markets Code, 2025, highlights that VDAs are currently excluded from definitions of securities. This creates a significant "regulatory grey area" as existing crypto taxation and anti-money laundering laws do not cover investor protection or governance.
The Numbers
- The committee noted the proposed Securities Markets Code adopts a tech-neutral definition of securities, but explicitly excludes VDAs that don't satisfy legal characteristics.
- Many VDAs resemble regulated financial assets, exhibiting investment for financial returns, tradability on organised platforms, and price discovery through market forces.
- The current grey area leads to heightened risks of fraud, market manipulation, and inadequate grievance redressal for retail investors.
- The proposed framework must prescribe minimum standards for governance, transparency, disclosure, investor protection, and grievance redressal.
What Happens Next
🇮🇳 Why This Matters for India
For the 150+ Indian web3 startups building in Bangalore and Pune, clear VDA regulation could finally unlock institutional investment and mainstream adoption.
The Take
The committee's interim SRO proposal signals a pragmatic approach to regulation, acknowledging the sector's existence without full legislative overhaul yet. This could mean quicker, albeit self-governed, guardrails for crypto founders and investors, bypassing typical governmental delays for a few quarters.
Source:
MediaNama ↗