India crypto regulation is at an important juncture now that the government is set to address the findings of the Standing Committee on Finance of Parliament after a year of deliberations on virtual digital assets (VDAs).
Committee chairman Bhartruhari Mahtab said that the government is supposed to make a reply next week, and once done, the committee will come up with its official report.
It could help shed light on India’s crypto regulatory policy as legislators seek to understand how virtual assets can fit into the country’s financial ecosystem.
Also Read | Coinbase and Morpho Launch Massive USDC Boom Profit 2026
India Crypto Regulation Debate Follows Year-Long Consultations
The panel began its deliberations on virtual digital assets from September 2025 onwards. It has also been holding discussions with the Department of Economic Affairs, Reserve Bank of India (RBI), Central Board of Direct Taxes (CBDT), and other stakeholders who are operating in the virtual asset space.
The latest round of discussions was meant to be a summation of one-year deliberations by the panel. However, according to Mahtab, legislators have not formed a consensus on the matter yet.
He added that the government does not recognise virtual digital assets as an acceptable type of currency or financial asset, while at the same time it does not have any specific regulatory body in place for this sector.
Mr. Mahtab also pointed out the risks that could result from the lack of a specific regulatory structure within which this industry functions. In his words, the lack of regulation could provide chances for abuse, among other things.
This is an important issue for the India crypto regulation debate, especially with the development of digital asset activity along with India’s wider digital financial system.
UPI Concerns Raised During Discussions
However, issues related to Unified Payments Interface (UPI) have been discussed in informal ways.
Nonetheless, Unified Payments Interface (UPI) was not among the agenda items for the recent committee meeting. Mahtab added that the matter could be looked at by a new committee after it forms in October.
Unified Payments Interface (UPI) has now been incorporated into India’s digital payments system. The relationship that Unified Payments Interface (UPI) might share with the digital asset financial systems could then emerge as another topic of discussion when it comes to India crypto regulation.
Demat 2.0 Brings Tokenised Bonds and Digital Rupee Together
Even as legislators keep studying the private cryptos, Indian regulators are also exploring blockchain technology by way of regulated financial market projects.
The SEBI is launching the Demat 2.0 pilot program for corporate bonds, which enables the issuance and tokenization of securities in the form of digital assets over distributed ledger systems run by statutory depositories.
This system is also linked to the wholesale digital rupee of the RBI via the Unified Market Interface. This enables the transfer of both the bond and the payment simultaneously using the atomic delivery-versus-payment model.
The core aim of this project is to expedite the process of bond settlement without causing any failure or partial execution of the transaction.
This test proves that India’s stance on blockchain technology goes beyond just the discussion of private cryptocurrencies. The regulators are exploring the use of blockchain in the context of the country’s existing financial-market regulations.
The initiative is described by SEBI as a mixture of natively issued distributed-ledger bonds, statutory depository ownership registries, and central bank digital currency settlements through regulated market infrastructure.
India Crypto Regulation Could Shape the Next Policy Stage
The emergence of developments related to Demat 2.0 reveals the distinction between blockchain technology and virtual assets in India’s policy discussions.
Whereas the regulators are experimenting with tokenization and distributed ledger technology in a regulated financial market, legislators are considering how to deal with private cryptocurrencies and other VDAs.
The response of the government will thus emerge as a crucial component in the process of India crypto regulation. After the response has been received, it will be utilized by the Standing Committee on Finance while preparing its report based on the evidence collected from various regulatory bodies and others.
The report of the committee would assist in identifying the key regulatory, financial, and policy issues related to virtual digital assets in India. The future course of action would depend upon the decisions of the government and its policy-making process.
For the crypto asset industry, the next step in India crypto regulation would come into the spotlight when policymakers decide whether the current regulatory regime suffices or whether a more concrete one needs to be developed for virtual assets.
Also Read | House Crypto Tax Bill Proposes $10 Fee Relief and New Wash-Sale Rules
Be the first to comment