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Cryptocurrency industry leaders praised the government’s call for self-regulatory bodies to regulate virtual digital assets (VDA), calling it a ”practical” move to address current realities of the VDA ecosystem.The Parliamentary Standing Committee on Finance on Thursday released its report on the Securities Markets Code, 2025, which suggested an interim regulatory mechanism for VDAs, such as cryptocurrency platforms, through a recognised Self-Regulatory Organisation (SRO). These regulatory bodies will operate under regulatory oversight until the government introduces a comprehensive framework.Cryptocurrency exchanges such as CoinDCX and CoinSwitch praised the move as a pragmatic approach to India’s current VDA ecosystem.“The Committee made some very keen observations that validate the realities of our industry. While the proposed Code adopts a technology-neutral definition of securities, most VDAs do not fit neatly into traditional legal definitions of securities or derivatives. Despite this, VDAs are increasingly traded as financial assets, exhibiting clear features of price discovery, tradability on organised platforms, and significant retail participation,” said Sumit Gupta, co-founder of CoinDCX.Stating that the proposal correctly identifies the position of VDAs within the regulatory grey area of India’s securities framework, Edul Patel, Founder and CEO of Mudrex, said, “The committee’s observations echo the industry’s long-standing concern that the lack of consumer protections and market conduct norms leaves investors with limited remedies against fraud, market manipulation, and other risks, while also stunting market development.”Recently, the crypto sector has witnessed growing retail participation in these assets, accelerated last year by market performance, according to Snigdhaneel Satpathy, partner at Saraf and Partners.“SROs seem convenient. However, SROs in India are always open to interpretation by Indian companies. They cannot levy penalties nor do they possess investigative powers. There are macro risks they cannot address, such as cross-border issues. So this is more of a stop-gap measure,” he said.Nonetheless, SROs act as an interim middle ground while the government prepares to regulate this emerging asset class. Going forward, the lawyer advised companies to prioritise grievance redressal mechanisms when establishing their regulatory bodies, a move that the crypto industry association has been working on even before the committee report.Further, Snigdhaneel suggested the segregation of customer assets from company assets, regular disclosures, and transparency reports detailing arrangements with custodians, asset liabilities, and related matters. Similarly, he recommended establishing token-listing standards to explain token-related risks to customers.Published on July 24, 2026
