US crypto Bill exposes India's virtual digital asset regulatory gap

US moves to advance a landmark crypto bill as India weighs a statutory framework for virtual digital assets, with a parliamentary panel seeking interim SRO-based oversight

The US Senate’s move to advance a landmark cryptocurrency Bill is putting a spotlight on India’s own efforts to regulate virtual digital assets (VDAs), with a parliamentary panel recently calling for a statutory framework to address the regulatory vacuum surrounding VDAs. 

US Senate Majority Leader John Thune on Saturday filed a motion to end further debate on the Digital Asset Market Clarity Act, paving the way for a procedural vote on September 15. The Bill was passed by the US House of Representatives on July 17, 2025, with bipartisan support. 

The 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. Pending such legislation, the panel suggested an interim mechanism through recognised self-regulatory organisations (SROs) operating under the oversight of a designated regulator. 

The US legislation 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). It also contains provisions dealing with digital-asset intermediaries and the classification and treatment of different types of digital assets. 

Ashish Singhal, cofounder, CoinSwitch, said the US Digital Asset Market Clarity Act marks an important step towards greater regulatory clarity for the global Web3 industry, the blockchain-based, decentralised internet ecosystem. “By moving from regulation by enforcement towards clearer statutory rules, particularly around SEC and CFTC jurisdiction and pathways for token decentralisation, it could address one of the key barriers to sustained institutional participation in the sector,” he added. 

Singhal said 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. “For India, where crypto adoption and Web3 talent remain major strengths, the US approach offers timely learnings on balancing consumer protection, anti-money laundering (AML) compliance and tax clarity without discouraging innovation. As regulatory frameworks mature across major economies, India has an opportunity to evolve towards a more enabling, risk-calibrated approach that supports domestic talent, encourages responsible innovation, and creates greater confidence for long-term institutional participation,” he said. 

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 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. It warned that the resulting uncertainty could expose investors to fraud, market manipulation, misrepresentation, and inadequate grievance redress, besides creating scope for regulatory arbitrage.

Edul Patel, chief executive officer 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. “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. US clarity would not dictate India’s path, but it could provide policymakers with a mature reference architecture as they consider how to balance investor protection, market oversight and innovation,” he added.

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. 

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”. 

Rules overdue 

• India taxes virtual digital assets and brings crypto entities under anti-money laundering rules
• There is no framework for issuance, trading, intermediaries, investor protection
• This could leave investors vulnerable to fraud, manipulation, misrepresentation and weak grievance redressal
• A House panel has recommended an interim self-regulatory organisation-based framework