The Parliamentary Standing Committee on Finance has recommended a comprehensive regulatory framework for Virtual Digital Assets (VDAs), including cryptocurrencies, in its report on the proposed Securities Markets Code, 2025. The panel highlighted the need for clarity as VDAs are currently excluded from the definition of securities, creating a regulatory grey area. It suggested that until legislation is enacted, the government consider interim oversight through Self-Regulatory Organisations (SROs) under regulators like the Reserve Bank of India or SEBI, according to medianama.com.
The committee pointed out that the technology-neutral definition of securities in the proposed code excludes VDAs that do not meet legal criteria for securities or derivatives. This exclusion results in regulatory uncertainty, increasing risks of fraud, market manipulation, and inadequate grievance redressal for investors. The panel warned that such ambiguity could harm investor confidence and undermine the securities market’s integrity and transparency. It also noted the potential for regulatory arbitrage in the absence of clear rules, as detailed by medianama.com.
This development comes amid growing concerns over the lack of a dedicated legal framework for cryptocurrencies and other VDAs in India. The committee’s call for regulation aligns with global trends where authorities seek to balance innovation with investor protection. The suggestion to use SROs under RBI or SEBI oversight reflects an interim approach to mitigate risks while comprehensive legislation is finalized. The report underscores the importance of addressing regulatory gaps to support orderly market development, as reported by medianama.com.
The committee’s recommendations are part of the report on the Securities Markets Code, 2025, submitted to the Indian Parliament this month. The government will now consider these proposals as it works towards establishing a formal regulatory regime for VDAs, with the next parliamentary session scheduled to review the code in August, according to medianama.com.