Parliament's Finance Committee Tables Its Crypto Report on 23 July
India's Parliamentary Standing Committee on Finance, chaired by BJP MP Bhartruhari Mahtab, tabled its 36th Report on the Securities Markets Code, 2025 in Parliament on 23 July 2026. The report is the committee's formal recommendation on how India should regulate cryptocurrencies and Virtual Digital Assets. The headline recommendation is a phased, industry-led model: rather than pulling crypto directly into the proposed Securities Markets Code or creating standalone new legislation immediately, the committee recommends that Virtual Digital Assets be governed initially through recognised Self-Regulatory Organisations operating under the statutory oversight of a designated regulator — either SEBI or the Reserve Bank of India.
The SRO-First Approach: What the Report Recommends
The committee's core proposal is that recognised industry bodies — Self-Regulatory Organisations formally approved by a statutory authority — would set and enforce minimum standards across India's crypto sector. These standards would cover governance of exchanges, transparency and disclosure requirements, investor protection mechanisms, grievance redressal processes, compliance regimes, and codes of conduct for market participants. The SROs would operate with delegated authority from either SEBI or the RBI, whichever is eventually designated as the primary statutory regulator. The committee explicitly stops short of recommending which of the two regulators should lead, noting that this question is subject to ongoing inter-ministerial negotiation.
Why Not Direct Inclusion in the Securities Markets Code?
The committee's reasoning for the SRO-first approach rests on the structural novelty of crypto assets. Including Virtual Digital Assets directly in the Securities Markets Code would require treating them as conventional financial instruments subject to the full body of Indian securities law — a classification that is contested both technically and politically, and one that would extend SEBI's standard regulatory obligations to a sector whose custody arrangements, settlement infrastructure, and market structure differ materially from traditional securities markets. The SRO model gives the sector time to develop compliance infrastructure under statutory oversight without requiring an immediate, comprehensive legislative codification.
What the Committee Consulted and Studied
The committee conducted extensive consultation before arriving at its recommendations. It met major global and India-based crypto exchanges including Binance, WazirX, ZebPay, CoinDCX, CoinSwitch, and Coinbase India, as well as the International Financial Services Centres Authority and representatives from several central government ministries. The committee also studied the regulatory frameworks in force in the United Kingdom, Singapore, the United States, and the European Union. The comparative conclusion from those four jurisdictions was consistent: India should not wait for a single comprehensive law before establishing any regulatory oversight. Every major jurisdiction that has successfully regulated crypto began with an interim or transitional framework while full legislative consolidation was still in progress.
The RBI Position and the Existing Tax Regime
One important background element is the RBI's public position on crypto, expressed to the parliamentary panel at its July 2 sitting. The central bank told the committee that not having an explicit policy on an asset class is itself a policy choice — a statement that signals the current regulatory ambiguity around crypto in India is unsustainable from a financial stability perspective. Separately, the committee report does not address India's 30 percent flat tax on Virtual Digital Asset gains, a levy introduced in the Union Budget 2022 and maintained in every budget since. That tax sits outside the scope of the Securities Markets Code and would require a separate amendment to the Income Tax Act to change. For businesses and individual users in India, the 30 percent VDA tax and the one percent TDS on VDA transfers remain in force regardless of whatever regulatory framework is eventually established under the committee's recommendations.
What This Means for India's Crypto and Web3 Industry
The committee's recommendation is the clearest signal yet that India intends to regulate rather than ban crypto assets, and that the route to regulation will be incremental rather than a single legislative overhaul. For Indian crypto exchanges, the SRO model carries direct operational implications: exchanges currently operating under the limited-compliance model that has applied since PMLA registration became mandatory in 2023 would be required to meet SRO-defined standards on governance, disclosures, investor protection, and conduct. The cost of compliance will increase, but the regulatory clarity of an official framework substantially reduces the business risk of operating in an ambiguous legal environment. For Indian technology companies building in the Web3 space — on-chain payment infrastructure, tokenised financial instruments, NFT marketplaces, or decentralised application platforms — the phased SRO model provides a workable operating environment for the next twelve to eighteen months while the legislative framework is negotiated. The practical preparation step for this period is to build compliance infrastructure aligned with the minimum governance and disclosure standards SROs are expected to define, rather than waiting for final legislative text.
The Bottom Line
India's Parliamentary Standing Committee on Finance tabled its 36th Report on the Securities Markets Code on 23 July 2026, recommending that Virtual Digital Assets be regulated through recognised industry Self-Regulatory Organisations operating under the oversight of either SEBI or the RBI. The report, chaired by BJP MP Bhartruhari Mahtab, stops short of pulling crypto directly into the Securities Markets Code and does not specify which regulator should lead. The committee consulted Binance, WazirX, ZebPay, CoinDCX, CoinSwitch, Coinbase India, and the IFSCA, and studied regulatory frameworks in the UK, Singapore, the US, and the EU. India's 30 percent tax on VDA gains is unaffected by the report's scope. For Indian tech companies building in crypto and Web3, the SRO-first recommendation signals regulatory intent without immediate legislative finality — the practical posture for the near term is to build compliance infrastructure aligned with the minimum governance and disclosure standards SROs are expected to define.
Frequently Asked Questions
What did India's parliamentary committee recommend for crypto regulation on 23 July 2026?+
India's Parliamentary Standing Committee on Finance tabled its 36th Report on the Securities Markets Code, 2025 in Parliament on 23 July 2026. The report recommends that Virtual Digital Assets — including cryptocurrencies — be regulated through recognised industry Self-Regulatory Organisations operating under the statutory oversight of either SEBI or the Reserve Bank of India. The committee, chaired by BJP MP Bhartruhari Mahtab, recommends a phased approach rather than pulling crypto directly into the Securities Markets Code, arguing India should begin with SRO-led governance while a broader legislative regime is negotiated across ministries.
What is an SRO in the context of India's proposed crypto framework?+
In the context of the parliamentary committee's July 2026 recommendation, a Self-Regulatory Organisation for crypto and Virtual Digital Assets would be an industry body formally recognised by a statutory regulator — SEBI or the RBI — with delegated authority to set and enforce minimum standards across the sector. These standards would cover exchange governance, transparency and disclosure requirements, investor protection mechanisms, grievance redressal processes, compliance regimes, and codes of conduct. The SRO model means the immediate enforcement layer is industry-led but under statutory oversight, not a purely voluntary initiative. India already uses the SRO model in traditional financial markets through bodies governing stockbrokers, depositories, and research analysts under SEBI.
Does the parliamentary report change India's 30% tax on crypto gains?+
No. The parliamentary committee's 36th Report on the Securities Markets Code, tabled on 23 July 2026, does not address India's tax treatment of Virtual Digital Assets. The 30 percent flat tax on crypto gains and the 1 percent TDS on VDA transfers were introduced through amendments to the Income Tax Act and are maintained separately from the securities regulatory framework. Any change to the VDA tax rate or structure would require a separate amendment to the Income Tax Act, which falls outside the scope of the Securities Markets Code and the committee's mandate. Both the 30 percent tax and the 1 percent TDS remain in force regardless of what regulatory framework is eventually implemented under the committee's recommendations.
Which exchanges and regulators did India's finance committee consult before tabling the crypto report?+
The Parliamentary Standing Committee on Finance consulted a wide set of exchanges and stakeholders before publishing its 23 July 2026 report. Exchanges that met the committee include Binance, WazirX, ZebPay, CoinDCX, CoinSwitch, and Coinbase India. The committee also consulted the International Financial Services Centres Authority, which oversees India's Gift City financial zone where some crypto-adjacent activities are already supervised, and representatives from several central government ministries involved in inter-ministerial discussions on VDA policy. The Reserve Bank of India testified before the committee at its July 2 sitting, telling the panel that not having an explicit policy on an asset class is itself a policy choice. The committee also reviewed crypto regulatory frameworks in the United Kingdom, Singapore, the United States, and the European Union.
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TechPillow Team
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