New Delhi: India’s virtual digital asset (VDA) industry has taken a step towards self-regulation. On October 28, the Bharat Web3 Association (BWA) launched an industry-led Self-Regulatory Organisation (SRO) initiative for the VDA sector. The development comes at a time when India is still considering a broader regulatory framework for VDAs, even as firms operating in the sector are already subject to tax reporting and anti-money laundering requirements.
The launch raises an important question: Can self-regulation help strengthen industry standards while India works towards a longer-term regulatory framework? An SRO does not imply that an industry can regulate itself without public oversight. Instead, an effective SRO operates alongside government regulation. Public authorities establish the broader rules and safeguards, while an SRO develops detailed standards for its members, monitors compliance and responds more quickly to emerging risks and industry practices.
The idea has also gained traction in formal policy discussions. In its 36th Report on the Securities Markets Code, 2025, the Parliamentary Standing Committee on Finance suggested that recognised SROs could serve as an interim mechanism for VDAs under the supervision of a designated regulator. The recommendation is not binding, nor did the Committee suggest that an SRO should replace a future regulatory framework. Rather, it presented self-regulation as a possible means of strengthening governance while a comprehensive framework is being developed.
India can draw lessons from other Asian markets to understand how such arrangements work in practice. Japan, for instance, has one of the most developed models. The Japan Virtual and Crypto assets Exchange Association is formally recognised as a self-regulatory body under the country’s financial regulatory system. It establishes detailed rules for member firms and monitors their conduct, while Japan’s Financial Services Agency retains overall regulatory authority. This model allows industry standards to evolve while ensuring that regulatory supervision remains with the state.
Taiwan has also incorporated self-regulation into its approach to VDAs. Its industry association develops standards covering customer protection, information security, grievance redressal and business conduct. These standards operate alongside the rules established by the financial regulator. The objective is not to shift regulatory responsibility away from the government, but to introduce an additional layer of discipline within the market.
South Korea offers a slightly different model. Its Digital Asset Exchange Alliance, formed by major exchanges, has developed common standards for the sector. Financial authorities in the country have also worked with the alliance to strengthen areas such as internal controls and risk management as new concerns have emerged. Some of these measures may eventually find their way into formal regulation.
The common lesson is clear: SROs are most effective when they complement public oversight rather than replace it. This principle is particularly relevant for India. VDA service providers operating in the country are already required to register with the Financial Intelligence Unit-India and comply with anti-money laundering and reporting obligations. Recent enforcement action against non-compliant platforms also indicates that the government is continuing to strengthen this compliance framework.
An SRO can build on this foundation by establishing common standards for customer protection, disclosures, grievance redressal, cybersecurity and market conduct. It can also provide a regular channel for identifying emerging risks and communicating them to the relevant authorities.
BWA has already developed industry-wide guidelines covering consumer protection, token listing, advertising, cybersecurity and fair trading. The October 28 initiative can therefore be viewed as part of a broader effort to strengthen industry accountability and encourage greater responsibility among VDA service providers.
