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The Parliamentary Standing Committee on Finance has recommended that any move to regulate cryptocurrencies and other virtual digital assets (VDAs) under the proposed Securities Markets Code should be preceded by wider policy deliberations and coordination among regulators and government departments.
Examining the Securities Markets Code, 2025, the committee noted that the proposed legislation has been designed as a technology-neutral framework, allowing tokenised versions of existing securities such as shares, bonds and units of investment schemes to remain within the ambit of securities regulation. However, the panel observed that cryptocurrencies that do not possess the characteristics of securities or derivatives may remain outside the proposed law. Quoting the Ministry of Finance, the report stated: "Virtual Digital Assets such as cryptocurrencies that do not fall within the definitions of 'security' or 'derivative' under the Securities Contracts (Regulation) Act, 1956 or the Securities Markets Code may remain outside the purview of the definition of 'securities', notwithstanding their digital nature or the terminology used to describe them." The Ministry further informed the committee that crypto-assets are currently outside India's formal regulatory framework except for taxation, anti-money laundering and reporting requirements. The report said: "The position of the Central Government regarding crypto-assets, including Virtual Digital Assets, is that such assets are presently unregulated in India, except for the limited purposes of taxation, prevention of money laundering and reporting." According to the report, the government believes that framing a comprehensive regime for crypto-assets would require both domestic and international coordination. The report quoted the Ministry as saying: "Any regulatory framework for such assets would require significant international and domestic coordination." The Ministry also stated that bringing VDAs under the Securities Markets Code would require broader policy consideration and consultations across regulators and departments, and that it may not be appropriate to include such assets within the Code at this stage. The committee also examined concerns that certain crypto arrangements involving pooled investor funds, passive participation and third-party management could resemble investment schemes and may require an enabling regulatory framework in the future. Drawing from global practices, the report noted that jurisdictions such as the United States, Singapore, the United Kingdom and the European Union generally adopt technology-neutral definitions, regulating crypto-assets that exhibit characteristics of securities under existing securities laws while creating separate frameworks for other digital assets. (ANI)
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