India’s Parliamentary Standing Committee on Finance tabled its 36th Report on the proposed Securities Markets Code, 2025, in Parliament on July 23, 2026. The report follows extensive consultations with regulators, exchanges, industry bodies, legal experts and other stakeholders on the proposed Code, including submissions on how virtual digital assets (VDAs) should be treated under India’s regulatory framework.
Here’s what the report talks about India’s regulatory stand on crypto.
- Bitcoin, Ether, and most VDAs stay outside the new Securities Markets Code; they are not treated as securities just because they exist on a blockchain.
- Tokenised shares, bonds, or mutual fund units remain securities regardless of the technology used to represent them.
- Crypto-based arrangements could still fall within the Code’s investment scheme provisions if they satisfy the legal characteristics of an investment scheme, including pooled investor funds and management by another person.
- The Committee wants a dedicated VDA law, and until that arrives, it has proposed an interim SRO-based oversight regime.
The Code does not regulate crypto by default
The Ministry of Finance told the Committee that the Securities Markets Code is intended to be technology neutral. But that neutrality does not extend to automatically pulling cryptocurrencies under securities law. A crypto asset like Bitcoin or Ether is not covered simply because it is digital or trades on an exchange.
For that to change, an asset has to first meet the legal definition of a security or a derivative. Most standalone VDAs do not.
Why tokenisation does not change what an asset is
The report is direct about this. Wrapping a traditional financial instrument in blockchain technology does not change its legal character.
- A tokenised share is still a share.
- A tokenised bond is still a bond.
- A tokenised mutual fund unit is still a security.
Distributed ledger technology is treated as a delivery mechanism, not a legal transformation.
| Asset type | Covered under Securities Markets Code? |
| Tokenised share, bond, or mutual fund unit | Yes, treated as a security |
| Standalone crypto (Bitcoin, Ether, most VDAs) | No, outside the Code for now |
| Crypto scheme with pooled funds and third party management | Possibly, depends on structure under Clause 32 |
In short, a crypto arrangement may qualify as an investment scheme under Clause 32 if, based on its facts and structure, it satisfies the statutory requirements for an investment scheme.
In plain terms: a token that trades freely on an exchange is treated differently from a scheme that promises managed returns on pooled crypto. The second one has always carried more legal exposure, and this report does not soften that.
The regulatory gap the Committee is flagging
This is the part with the most weight.
The Committee notes that many VDAs exhibit characteristics commonly associated with regulated financial products, they are widely traded, attract retail participation, and can involve speculative or leveraged activity, but currently sit outside the securities law framework.
What is being proposed next
Rather than recommending bringing crypto within the Securities Markets Code, the Committee recommends that the Government examine a separate, comprehensive regulatory framework for VDAs.
Until that legislation exists, it suggests an interim regime run through Self-Regulatory Organisations supervised by a designated regulator, covering:
- Governance standards
- Disclosure requirements
- Investor protection
- Grievance redressal
- Compliance standards
- Regulatory oversight
That is a meaningfully different approach from bringing crypto under an existing securities framework. It is a purpose built structure, just not written yet.
What this means if you hold or trade crypto
Nothing changes in your day to day compliance right now. Your tax obligations on crypto gains remain exactly what they were before this report. Bitcoin, Ether, and similar assets are not suddenly securities, and you do not need to treat your holdings any differently.
What is worth tracking is that the Committee has recommended a dedicated VDA framework, with an interim SRO-supervised regime as a possible bridge. Whether and how those recommendations are implemented will depend on the Government’s response and any future legislation.
Watching how that framework takes shape over the next few quarters will matter more than this specific report on its own.
Disclaimer: This is a Parliamentary Standing Committee report recommending changes to the proposed Securities Markets Code. It does not itself change the law, and the Government may accept, modify, or reject the Committee’s recommendations.
Frequently Asked Questions
No. Standalone crypto assets that do not meet the legal definition of a security or derivative stay outside the Code.
No. A tokenised share, bond, or mutual fund unit is still regulated as that same asset. Blockchain is the delivery method, not a legal reclassification.
Yes, if it involves pooled investor money and third party management, it could fall under investment scheme provisions like Clause 32, depending on the facts.
The Committee has recommended the government examine one, with an interim SRO supervised regime as a bridge until that legislation is in place.
No. Taxation, anti-money laundering rules, and reporting requirements for VDAs remain unchanged and separate from this Code.
Because VDAs are widely traded, attract retail investors, behave like speculative securities, and currently lack the investor protections that formal securities regulation provides.
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