The recommendation comes as cryptocurrencies in India operate under a limited regulatory framework. While crypto transactions are taxed and exchanges are required to comply with anti-money laundering reporting requirements, there is no dedicated law governing aspects such as custody, ownership, market conduct and investor protection.
The committee has suggested that the SRO should function under the supervision of a designated regulator such as the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI). It has also recommended examining a statutory framework covering cryptocurrencies, non-fungible tokens (NFTs) and decentralised finance (DeFi) tokens.
Why an SRO model is being considered
The proposed SRO is expected to act as an interim mechanism by creating industry standards and strengthening oversight while a broader regulatory framework takes shape.
“The significance of the Standing Committee on Finance’s recommendation is that the policy discussion has become more exact. India has so far used tax provisions and anti-money laundering reporting to deal with an activity that has acquired the characteristics of a market. Both are necessary, but neither was designed to govern custody, ownership, and market conduct,” said Vikram Subburaj, CEO, Giottus.com, an Indian cryptocurrency exchange platform.
He added that the SRO should be seen as a transition mechanism rather than a replacement for a formal law. “It can establish common standards under regulatory oversight. It can also give the regulator direct experience of how this market functions. However, it should not be mistaken for a complete framework.”
Vikaas M Sachdeva, CEO, BitDelta India, a security-first, FIU-registered virtual digital asset (VDA) trading platform, said the recommendation reflects a move towards greater policy certainty for the sector.
“For an industry that has long operated in an uncertain policy environment, this signals a maturing conversation between the sector and policymakers,” he said, adding that an SRO-led approach could improve accountability while supporting responsible innovation.
Classification of crypto assets remains a key challenge
Beyond creating an oversight structure, the committee has highlighted the importance of classifying digital assets based on their underlying economic function.
Experts say different categories of tokens may require different regulatory treatment. Some assets may resemble investment products, while others could have payment-related or technology-driven use cases.
“India is not obliged to inherit the binary debate seen elsewhere, where tokens must either be treated as securities or left outside financial law,” Subburaj said.
He added that investment products could fall under securities regulation, payment-like instruments could require a different approach, while trading and custody of issuerless assets may need separate market-conduct rules.
The committee has also emphasised that securities laws should remain technology-neutral. This means tokenised securities issued using blockchain or distributed ledger technology would continue to remain within the ambit of securities regulations.
Manhar Garegrat, India Head, Liminal Custody, a regulated digital asset wallet infrastructure and custody provider, said this could provide clarity for blockchain-based use cases.
“One of the most notable call outs is the technology-neutrality of the law and the fact that even tokenised representations of securities on distributed ledgers would continue to remain within the ambit of the securities code,” he said.
What it means for crypto investors
A recognised SRO could improve transparency across crypto platforms by encouraging better compliance standards, disclosures and investor grievance mechanisms.
However, the proposed framework would not eliminate risks associated with crypto investments, including price volatility, cybersecurity concerns and regulatory uncertainty.
Ashish Singhal, Co-founder, CoinSwitch, crypto investment platform, said the recommendation could help strengthen governance during the transition towards a broader framework.
“The recommendation to introduce an interim regulatory mechanism through a recognised Self-Regulatory Organisation, under regulatory oversight, is a pragmatic approach while a comprehensive framework evolves,” he said.
According to Singhal, an SRO-led model could help improve accountability and investor protection while allowing responsible innovation to continue.
