On July 23, India’s Parliamentary Standing Committee on Finance presented a new plan to regulate the country's cryptocurrency market.
The committee recommends allowing industry-led Self-Regulatory Organizations (SROs) to oversee crypto activities under supervision from the Reserve Bank of India or the Securities and Exchange Board of India.
This proposal targets the gap in legal protection for nearly 39 million KYC-verified Indian crypto traders who currently face a 30% tax on gains but lack formal regulatory safeguards.
The SROs would act as an interim watchdog, enforcing conduct standards while full crypto legislation is developed. They would be responsible for auditing exchange reserves, legally segregating customer funds from company assets, and handling customer complaints.
The committee based its approach on global models seen in the UK, Singapore, the US, and the EU, aiming to balance investor protection with market growth.
India today does not officially recognize digital assets as a distinct asset class. Profits from crypto are taxed at a flat rate of 30% with an additional 1% deduction at source on transactions, but there is no formal legal framework defining or protecting these assets.
The Ministry of Finance has identified the lack of legislation as a significant issue, complicating enforcement against money laundering and other risks.
