India's cryptocurrency regulation remains unclear, and the Supreme Court has once again raised concerns about the government's delay in setting clear rules. On Monday, the court questioned why the Centre remains without a straightforward approach to control Bitcoin and other virtual currencies, given their potential economic significance.
A bench of Justices Surya Kant and N Kotiswar Singh likened Bitcoin trading to an illegal activity, similar to a "hawala" business, which is an underground money transfer system. The judges questioned the government lawyer, asking why the Centre hasn't come up with a clear policy on cryptocurrency regulation. They pointed out that there's a hidden parallel market that could harm the economy and said proper regulation is needed to keep an eye on this trade.
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Justice Kant stressed, "Trading in Bitcoin is an illicit trade, similar to a Hawala business." The Additional Solicitor General, Aishwarya Bhati, sought time to obtain further instructions on the issue.
This issue arose during a bail hearing for Shailesh Babulal Bhatt, who was arrested in Gujarat for illegal Bitcoin trading. The court noted it was unclear whether Bhatt was a victim or a perpetrator. The government alleged that Bhatt was a major player in the Bitcoin trade who defrauded investors by promising high returns and was also involved in kidnapping, PTI reported.
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In early May, the Supreme Court had already expressed frustration over the lack of clear cryptocurrency regulations, saying Bitcoin trading in India is like dealing in a sophisticated form of hawala.
Bhatt's lawyer contended that trading in Bitcoin is legal in India, referring to the Supreme Court's 2020 ruling that overturned the RBI's ban on cryptocurrency transactions, which calls into question the validity of Bhatt's arrest.
In February 2022, the highest court instructed the government to provide a clear position on the legal status of cryptocurrency trading, including Bitcoin, within India.
The case involves multiple FIRs against Bhatt, who is accused of deceiving investors by enticing them to trade in Bitcoin with promises of high returns. The court's ongoing concern emphasizes the critical need for a comprehensive regulatory framework to address the risks and challenges associated with cryptocurrency trading in the country.
