Finance Panel Backs Self-Regulatory Organizations (SRO) as Interim Step to Protect India’s 12 Crore Crypto Investors Before VDA Law
India’s Parliamentary Standing Committee on Finance has asked the government to bring a clear VDA framework for Virtual Digital Assets, including cryptocurrencies. The panel said the fast-growing market needs proper laws to protect investors and remove confusion around digital assets.
The recommendation came in the committee’s report on the proposed Securities Market Code. According to the panel, crypto assets remain outside a dedicated legal framework, even though the government already taxes them and monitors transactions under anti-money laundering rules. This gap creates uncertainty for investors and businesses.
Committee Pushes for Dedicated Crypto Rules
The committee said India should introduce a separate system for crypto regulation instead of leaving the sector in a legal grey area. Members warned that unclear rules can increase the risk of fraud, market manipulation, misleading claims, and weak complaint handling. Strong laws can improve investor protection and support a safer digital asset market.
The report also explained that many Virtual Digital Assets do not match the legal definition of securities under the proposed code. As a result, existing securities rules cannot fully regulate the sector. The committee believes a dedicated law will provide clarity for companies, investors, and regulators.
Temporary Oversight Suggested Before New Law
Until Parliament passes a full law, the panel suggested creating recognized Self Regulatory Organizations (SROs) under the supervision of a financial regulator. These organizations can set standards for governance, transparency, disclosures, compliance, and fair market practices while the government prepares permanent legislation.
The committee estimated that nearly 12 crore Indians already own or use digital assets. Such a large user base makes clear regulations more important for the country’s financial system.
The government told the committee that building a long-term VDA framework will require cooperation with both Indian and global regulators. The panel believes clear crypto regulation can encourage responsible growth while giving investors greater confidence in India’s Virtual Digital Assets market.
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