The Indian government is scheduled to respond next week to findings from the Standing Committee on Finance following a year of deliberations on virtual digital assets (VDAs). Committee chairman Bhartruhari Mahtab stated that the government’s reply will precede the committee’s official report. The panel has consulted with the Department of Economic Affairs, the Reserve Bank of India, and the Central Board of Direct Taxes since September 2025. No consensus has been reached, and Mahtab noted that the government does not currently recognize VDAs as currency or financial assets and lacks a specific regulatory body for the sector. Meanwhile, SEBI has launched a Demat 2.0 pilot for tokenised corporate bonds using the digital rupee.
India’s cryptocurrency regulation is approaching a critical phase as the government prepares to address the findings of the Standing Committee on Finance. Committee chairman Bhartruhari Mahtab said that the government is supposed to reply next week, after which the committee will produce its official report.
The panel began its deliberations on virtual digital assets in September 2025, holding discussions with the Department of Economic Affairs, the Reserve Bank of India (RBI), the Central Board of Direct Taxes (CBDT), and other stakeholders. Mahtab indicated that 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” and that there is no specific regulatory body for this sector. Mahtab also pointed out the risks from the lack of a specific regulatory structure, stating that it “could provide chances for abuse.”
Separately, issues related to the Unified Payments Interface (UPI) were discussed informally, though UPI was not on the agenda for the recent committee meeting. Mahtab noted the matter could be examined by a new committee after it forms in October.
Meanwhile, SEBI is launching the Demat 2.0 pilot program for corporate bonds, enabling tokenization of securities over distributed ledger systems run by statutory depositories. This system is linked to the RBI’s wholesale digital rupee via the Unified Market Interface. The project aims to expedite bond settlement using an atomic delivery-versus-payment model, preventing failure or partial execution. SEBI describes the initiative as a blend of natively issued distributed-ledger bonds, statutory depository ownership registries, and central bank digital currency settlements.
The government’s response will be a crucial input for the Standing Committee on Finance as it prepares its report based on evidence from various regulatory bodies. The report will help identify key regulatory, financial, and policy issues related to virtual digital assets in India.
