- By Dilip Chenoy and Prof. (Dr.) S. Shanthakumar
08th May, 2026 :
The last decade has witnessed an incremental policy response, although a cautionary one for virtual digital assets (VDAs) from India. What started as a question of VDA being an asset or not, slowly shifted towards examining the need for a regulation in the otherwise nebulous zone in which it is currently placed. This shift is primarily premised on the global maturity surrounding VDA, which points to the direction that inaction to bring coherence to the domestic regulatory framework would make it difficult for peripheral risks surrounding VDAs to be curtailed.
The genesis of absent regulatory posture was witnessed right from the initial cautionary note of the Reserve Bank of India in 2013, followed by a ban of 2018, which was set aside by the Supreme Court of India in 2020 through the Indian Mobile Association case. However, this did not stop further interventions, specifically in the form of taxation on VDAs. Also, the Income Tax Bill, 2025 intends VDA classification under the capital asset category, thus increasing the fiscal and compliance layer against VDAs.
This evolving, slope-sided regulatory attempt instils a fear-mongering undercurrent among the investors, that any transaction could potentially invite a microscopic investigative lens against the potential business. This, in specific, requires a system-wide policy correction by design and default. Set in this context, the Gujarat National Law University conducted multiple nation-wide stakeholder consultations to prepare a Report on ‘Crypto-Assets in India: Assessing the Case for Regulation’. At the heart of the Report lies its structural assessment of regulatory models that are in existence, i.e., SEBI, RBI, MeiTY, along with two other propositions, including SRO and the Multi-Regulator model. Primarily, the Report assesses these five alternative options to live-test and demonstrate the suitability of each of them against the text, context and sub-text of VDA.
Two notable evaluations carried out in the Report relate to the self-regulatory organisation proposal and/or a coordinated multi-agency framework. SRO model intends to be a self-regulatory voluntary standard and norm-setting model, retaining the much-needed flexibility and industry-led clarity.
This suggestion pivots on the Governmental recommendation that the industries should become watchdogs themselves instead of regulators becoming hounds. The multi-agency framework positions itself in a way that a coordinated set of amendments is required in the laws across, along with authorities engineering the best-fit functional allocation rather than institutional exclusivity for VDAs in India.
The Report also sets out dedicated parts to emphasise the need to provide for a proper asset classification within which VDA can be placed. It argues that functional categorisation would be a more suitable classification than a risk-based approach. This argument is in line with adaptability to new assets and technological developments that move past the law and a context-sensitive transplantation from mature jurisdictions. Thus, the outcome of the Report reinforces the need for legitimate design in law, shielding itself from vulnerabilities and considering the actual socio-economic realities prevalent in society.
Anchored within this dialogue, the Report navigates to present a set of recommended amendments along with offering a policy framework that functions within an appropriate context-driven governance structure, one that ensures institutional stability while synthesising with market innovation to place India as a policy leader within the evolving global digital asset ecosystem.
