Can Parliamentary Panel’s Latest Recommendations Break Crypto Policy Deadlock?

by · Inc42

SUMMARY

  • The Parliamentary Standing Committee on Finance has recommended an interim self-regulatory framework for the VDA sector and sought greater clarity on how digital assets should be classified under the proposed Securities Markets Code
  • While the recommendations are not binding, industry executives believe they signal Parliament's strongest acknowledgement yet of the regulatory vacuum surrounding India's crypto sector and could lay the groundwork for a broader regulatory framework
  • Industry stakeholders say different categories of digital assets should be regulated based on their economic function rather than through a one-size-fits-all framework, with multiple regulators overseeing different segments
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For years, India’s approach towards cryptocurrencies has largely revolved around taxation, anti-money laundering (AML) compliance and transaction reporting, while a comprehensive regulatory framework has remained elusive. 

Now, the Parliamentary Standing Committee on Finance’s recommendations on the proposed Securities Markets Code, 2025, have reignited hopes within the crypto industry that the policy conversation may finally be moving beyond taxing crypto transactions towards regulating the market itself. 

The committee has recommended creating an interim regulatory mechanism for virtual digital assets (VDAs) through a recognised self-regulatory organisation (SRO) operating under a designated regulator. It has also sought greater clarity on how crypto investment products and tokenised securities should be treated under the proposed law.  

The recommendations do not change India’s regulatory framework. But for many in the industry, they represent something equally significant: a parliamentary panel formally acknowledging that the sector continues to operate in a regulatory grey area.

“It’s an important signal, though not yet a shift in policy. It’s a shift in official acknowledgement,” Mudrex founder and CEO Edul Patel told Inc42.  

According to Patel, the committee has, for the first time in a parliamentary document, recognised that excluding VDAs from India’s securities framework has created a regulatory gap that needs to be addressed. 

India currently taxes income from VDAs at 30%, levies a 1% TDS on specified VDA transfers above prescribed thresholds, and requires crypto exchanges and other VDA service providers to register with the Financial Intelligence Unit-India (FIU-IND) under the Prevention of Money Laundering Act (PMLA) framework. However, the country is yet to introduce a comprehensive law governing the sector.