Indian Finance Committee Proposes Self-Regulatory Organization to Oversee Cryptocurrency Market

The Indian Parliament's Standing Committee on Finance has suggested the establishment of a temporary regulatory framework led by a recognized self-regulatory organization to oversee the domestic cryptocurrency and virtual digital asset market. The committee warned that the lack of a clear legal framework exposes millions of retail investors to operational, custodial, and fraud risks. This self-regulatory organization should operate under the direct supervision of the Reserve Bank of India or the Securities and Exchange Board of India, implementing standardized codes of conduct that cover consumer protection, platform transparency, and token disclosure standards, and be responsible for auditing exchange reserves, enforcing the segregation of customer funds from corporate funds, and establishing user complaint handling channels. The committee emphasized that this temporary mechanism must operate under strict oversight from the central bank or the securities regulator to address macroeconomic risks such as cross-border capital flows, dollarization of stablecoins, tax evasion, and violations of foreign exchange management laws.

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