India’s crypto confusion: Supreme Court calls for urgent regulation
India’s apex court has raised serious concerns about the increasing popularity of Bitcoin trading in the country, highlighting the government’s slow pace in establishing regulatory measures. During a hearing, the court compared the unregulated use of Bitcoin to a “refined form of Hawala,” an informal and often illegal money transfer system.
India’s Supreme Court calls for regulation
According to local media outlet Business Standard, during a bail hearing for Shailesh Babulal Bhatt, who has been in custody since August 2023 on charges of illegal Bitcoin trading, the Supreme Court made some eyebrow-raising comments. Justice Surya Kant openly admitted he doesn’t fully understand Bitcoin but emphasised the lack of any regulatory framework. In his words, “Trading in Bitcoin in India is like dealing with a refined way of Hawala business.”
The case of Shailesh Babulal Bhatt
Shailesh Babulal Bhatt was arrested in August 2024 by the Directorate of Enforcement (ED) in Ahmedabad under the Prevention of Money Laundering Act (PMLA). He is accused of extorting 2091 Bitcoins, 11000 LiteCoins, and INR 14.50 Crore in cash, valued at approximately INR 1232.50 Crore, from two employees of Satish Kumbhani, the promoter of the collapsed BitConnect platform.
Bhatt remains in custody as the investigation continues, with the ED having already attached properties worth INR 442 Crore in connection with the case. The Supreme Court is now considering his plea but has also questioned the broader legality of his actions due to India’s murky crypto laws.
The lack of regulation in India
Two years ago, the same bench asked the Centre to define its stance on virtual currencies. A growing number of Indians are trading in crypto with zero legal safety nets. In India, cryptocurrencies are not legally defined as legal tender, but they are not explicitly illegal either. The government has a comprehensive taxation regime in place, including a flat 30 percent tax on capital gains from cryptocurrency transactions.
This half-legal status has led to total confusion. Police and regulatory agencies are unsure how to proceed with crypto-related crimes. Meanwhile, the Enforcement Directorate (ED) is stepping in to investigate alleged money laundering, but even they are stumbling in the dark without clear guidelines.
Bitcoin’s value and global acceptance
At the time of the hearing, Bitcoin was worth ₹82 lakh (around $100,000). Advocate Rohatgi, defending Bhatt, even joked that one could walk into a foreign showroom and buy a car with a single Bitcoin.
“All I understand is that there are some genuine Bitcoin and some are fake Bitcoin,” Justice Surya Kant said. Rohatgi stated, “You see, trading in Bitcoin in India is like dealing with a refined way of Hawala business. There are no regulations at present. I checked on Sunday, and the value of one Bitcoin was Rs 82 lakh.”
Countries like the UAE, Singapore, and even El Salvador are building crypto ecosystems. Meanwhile, India risks losing its brightest minds to countries with friendlier laws. It’s time for the Centre to create a proper regulatory framework that could solve half the problems overnight.
