India's Parliamentary Standing Committee on Finance has recommended an interim regulatory body to oversee the cryptocurrency market, submitting its Report No. 36 on the proposed Securities Markets Code, 2025 to Parliament on July 23, 2026. The proposal calls for industry-run Self-Regulatory Organizations (SROs) to enforce conduct standards under the supervision of the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI).
The move aims to protect an estimated 39 million Indian crypto users who currently operate without formal legal protections. Key responsibilities for the SROs would include auditing exchange reserves, legally segregating customer funds from company assets, and managing complaint resolution. The committee studied similar frameworks in the United Kingdom, Singapore, the United States, and the European Union before crafting its recommendation.
India lacks statutory recognition for digital assets as an asset class, though it imposes a flat 30% tax on crypto profits and a 1% tax deducted at source on transactions. The Ministry of Finance considers crypto-assets beyond its regulatory scope except for taxation, anti-money laundering, and reporting rules. The RBI has continued to push for a ban, recently reiterating concerns that dollar-pegged stablecoins could undermine monetary sovereignty. Tax authorities have also highlighted difficulties in tracking offshore trades, noting that less than 25% of the 645,000 individuals transacting in crypto in the year to March 2023 reported their profits.
Critics argue the harsh tax regime has backfired, driving activity abroad. Rajya Sabha member Raghav Chadha stated in February that 73% of India's crypto volume had migrated to foreign exchanges, with around 120 million Indians using overseas platforms and roughly 180 crypto startups relocating. The committee emphasized that legal definitions of digital assets are urgently needed, as some tokens may function like securities, derivatives, or entirely new categories.
Industry participants welcomed the recommendation. Manhar Garegrat, head of Liminal Custody, called it “a constructive step toward building a more mature digital asset ecosystem in India.” The government is now expected to draft robust legislation and formal classifications, with the SRO framework serving as a temporary safeguard until permanent laws are enacted.
