India’s Standing Committee on Finance has recommended that the government set up an interim regulatory framework for the domestic cryptocurrency and virtual digital asset market, according to FinanceFeeds. The proposal would place a recognized self-regulatory organization, or SRO, at the center of day-to-day oversight.
The committee said the lack of a clear legal framework leaves millions of retail investors exposed to operational, custody and fraud risks. Under the proposal, the SRO would work under the direct supervision of either the Reserve Bank of India or the Securities and Exchange Board of India.
Its remit would include enforcing a standardized code of conduct, covering consumer protection, platform transparency and token disclosure standards. The committee also said the SRO should audit exchange reserves, require the segregation of customer funds from company funds, and create channels for user complaints.
The panel stressed that any interim SRO structure must remain under strict central bank or securities regulator oversight to address broader macroeconomic risks, including cross-border capital flows, stablecoin dollarization, tax evasion and violations of foreign exchange management rules.
India’s Standing Committee on Finance has recommended that the government create an interim regulatory framework for the country’s cryptocurrency and virtual digital asset market, according to FinanceFeeds. The framework would be led by a recognized self-regulatory organization, or SRO.
The committee warned that the absence of a clear legal framework leaves millions of retail investors exposed to operational, custody and fraud risks.
What the proposed SRO would do
Under the recommendation, the SRO would operate under the direct supervision of the Reserve Bank of India or the Securities and Exchange Board of India. It would enforce a standardized code of conduct covering consumer protection, platform transparency and token disclosure standards.
The committee said the SRO should also audit exchange reserves, require the segregation of customer funds from corporate funds, and establish channels to handle user complaints.
Risks highlighted by the committee
The panel said the interim SRO must function under strict central bank or securities regulator oversight to address macroeconomic risks tied to cross-border capital flows, stablecoin dollarization, tax evasion and violations of foreign exchange management law.
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