India’s parliamentary finance panel is nearing the completion of a report advocating stricter oversight of digital assets, amid warnings from regulators and a push for clearer legal frameworks to address cryptocurrency and NFT risks.
India’s parliamentary finance panel is close to completing a report that could push the government towards tighter monitoring of cryptocurrency transactions and a broader review of what legal status should attach to digital assets, according to a source familiar with the matter. The committee, chaired by Bhartruhari Mahtab, has spent more than a year examining virtual digital assets, the umbrella term used in India for cryptocurrencies and non-fungible tokens, and is expected to submit its findings to the Speaker of the Lok Sabha.
The likely thrust of the report reflects a harder line already being taken by regulators and enforcement agencies. The Financial Intelligence Unit-India has issued non-compliance notices to 15 virtual digital asset service providers under the anti-money laundering law and ordered the removal of their apps or web addresses from public access, according to Moneycontrol. The Ministry of Finance has also warned the public that crypto products and NFTs remain unregulated in India and can involve significant risk, with little or no recourse if losses occur. Financial Express separately reported that the government continues to track tax evasion and illegal use of crypto through multiple agencies, even though it does not maintain official data on holdings.
The Reserve Bank of India has meanwhile told the committee that virtual digital assets such as cryptocurrency pose a threat to the economy and should not be legalised, Economic Times reported. The central bank has pointed to risks including terror financing, drug trafficking and the practical difficulty of overseeing offshore operators. In January, panel chair Mahtab said after a meeting with officials from the Financial Intelligence Unit-India and the Central Board of Direct Taxes that the committee had discussed the state of crypto regulation and the tracking of money transferred fraudulently through digital assets and parked abroad, according to News Web India 123.
The wider debate in New Delhi has already moved beyond simple calls for caution. In July, the committee formally suggested an interim regulatory structure for cryptocurrencies and virtual digital assets through recognised self-regulatory organisations under a statutory supervisor such as the Securities and Exchange Board of India or the Reserve Bank of India, according to reports from CryptoTimes. That proposal, together with a separate call for clearer definitions and oversight of tokenised assets, underlines the pressure on the government to choose between a restrictive approach and a framework that would attempt to bring the sector under formal supervision.
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