The US Senate's move to advance the Digital Asset Market Clarity Act is putting a spotlight on India's own efforts to regulate virtual digital assets, with a parliamentary panel recently calling for a statutory framework to address the regulatory vacuum surrounding VDAs. US Senate Majority Leader John Thune filed a motion on Saturday to end further debate, paving the way for a procedural vote on September 15. The Bill, which was passed by the US House of Representatives on July 17, 2025, with bipartisan support, seeks to establish a regulatory framework for digital commodities and delineate the respective jurisdictions of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). As per Business Standard, this development comes weeks after the Indian parliamentary standing committee on finance recommended that the Centre comprehensively examine the need for an appropriate statutory and regulatory framework for VDAs and cryptocurrencies.
A parliamentary committee has proposed the establishment of a self-regulatory organization (SRO) for cryptocurrencies, functioning under the supervision of central regulatory authorities. This interim solution calls for the government to assess a specific legal framework for virtual digital assets, with the objective to reduce risks associated with money laundering and tax evasion. The committee has categorised regulation of these assets as a vital aspect of national security for India. The parliamentary panel, in its report on the Securities Markets Code, observed that many VDAs are increasingly traded and invested in as financial assets but that their tradability on organised platforms and price discovery through market forces are not expressly recognised or regulated under the proposed code. The panel warned that the resulting uncertainty could expose investors to fraud, market manipulation, misrepresentation, and inadequate grievance redress, besides creating scope for regulatory arbitrage.
India's next digital asset policy should be measured by creating a predictable, accountable, and innovation-friendly regulatory environment rather than restrictiveness. As per The Economic Times, nearly all comprehensive legislation ensures legal certainty, with jurisdictions such as the European Union and Australia enacting laws that define rights, responsibilities, and regulatory obligations of service providers, issuers, and custodians. The framework should incorporate the principle of proportionality - 'same activity, same risk, same regulation' - as exemplified by MiCA's distinct requirements for crypto-asset service providers and stablecoin issuers, while Hong Kong maintains separate licensing regimes for trading platforms and stablecoin issuers. Consumer protection remains central, with the United Kingdom's evolving regulatory framework demonstrating how governance, disclosure, and operational guardrails can protect users while allowing responsible firms to innovate within clearly defined boundaries.
India's virtual digital asset (VDA) sector operates without comprehensive legal framework despite recognition under tax law. According to reports from The Economic Times, while VDAs are subject to anti-money laundering obligations and monitored by the Financial Intelligence Unit (FIU-IND), the country lacks a well-defined legal framework governing the sector. India currently taxes VDAs and has brought crypto-related entities within the AML framework, but cryptocurrencies do not have a comprehensive statutory regulatory framework governing their issuance, trading, market intermediaries, and investor protection. The finance ministry told the parliamentary panel that whether such activity falls within the regulatory ambit would depend on whether the relevant arrangement meets the characteristics of an 'investment scheme'. The Securities and Exchange Board of India similarly said VDAs that do not qualify as securities or derivatives under existing or proposed law may remain outside the definition of securities. Ashish Singhal, cofounder of CoinSwitch, said the US Digital Asset Market Clarity Act marks an important step towards greater regulatory clarity for the global Web3 industry, noting that when the world's largest financial market moves towards a more formal and predictable framework for digital assets, it creates an important benchmark for policymakers globally.
International regulatory frameworks have significantly advanced while India remains in regulatory limbo. As reported by The Economic Times, the European Union has operationalised the markets in Crypto-Assets (MiCA) Regulation, the United States has advanced legislation such as the GENIUS Act and CLARITY Act, while jurisdictions across Asia have introduced licensing and consumer protection frameworks. Edul Patel, CEO of Mudrex, said while the US legislation does not directly determine policy in other markets, its eventual shape could become an important reference point for regulators globally. He noted that India is already developing its own regulatory approach, with the recent parliamentary panel recommendations around an interim SRO-based framework showing that the conversation is moving forward domestically. The global stablecoin market value exceeds three hundred billion dollars, dominated by US dollar denominations, highlighting the strategic importance of India developing clear policies in this evolving financial architecture. Recent developments including renewed support for de novo bank formation, expanding enterprise AI adoption, strategic consolidation, and the emergence of a statutory framework for stablecoins illustrate how innovation is becoming more deeply integrated into mainstream financial services.
A recognised self-regulatory organisation (SRO) could bridge the regulatory gap during legislative development and provide essential industry standards. As reported by The Economic Times, such an organisation can translate broad supervisory objectives into enforceable industry standards while Parliament and financial regulators work towards comprehensive legislation. The parliamentary panel has recommended that an interim SRO-based mechanism prescribe minimum standards for governance, transparency, disclosure, investor protection, grievance redress, compliance, and regulatory oversight. The panel is also preparing a separate report on 'A Study on VDAs and Way Forward'. For financial institutions and fintechs alike, success will depend less on the ability to introduce new technologies and more on the capacity to deploy them responsibly and at scale, with regulators continuing to support innovation while emphasizing safety, soundness, consumer protection, and accountability. Singhal emphasized that for India, where crypto adoption and Web3 talent remain major strengths, the US approach offers timely learnings on balancing consumer protection, anti-money laundering compliance and tax clarity without discouraging innovation.
