The Supreme Court of India’s Inquiry on Cryptocurrency Regulation
The Supreme Court of India has issued a call for the federal government to clarify its delayed response in establishing definitive regulations for cryptocurrency. This inquiry arose during the court’s deliberation of a case involving allegations of cryptocurrency-related fraud against a petitioner.
Concerns and Recommendations by the Justices
Justices Surya Kant and N. Kotiswar Singh remarked that the unregulated nature of Bitcoin trading resembles a refined form of the traditional black market method known as Hawala. They advocated for regulatory measures as a means to supervise the sector and mitigate its potential misuse in illegal activities.
“Why hasn’t the Centre presented a concise policy for cryptocurrency management?”
The justices pointed out that the absence of regulation contributes to an underground market that could pose threats to the broader economy, arguing that overseeing cryptocurrency trading would be beneficial. The court, referencing its previous comments from nearly two years ago, reiterated the need for a clear stance on digital assets, emphasizing that outright prohibition of cryptocurrencies would be imprudent.
“We are not suggesting a halt to cryptocurrency; it would be unwise for the economy to do so.”
The judges indicated that ignoring the issue would be a form of denial regarding economic realities. Instead, they proposed that experts should be consulted to devise appropriate regulatory measures.
“We require insights from specialists in the field to ensure that some form of regulation is enacted.”
Significantly, the court noted that the taxation of profits from Bitcoin trading at a rate of 30% implies a degree of formal acceptance of these digital currencies, thus questioning why regulation has not followed.
Previous Scrutiny of Government Actions
This incident marks another instance in which the Supreme Court has scrutinized the government’s lack of action on cryptocurrency regulation. Earlier this month, legal experts commented on the disparity between the surging popularity of Bitcoin trading and the government’s slow approach to regulation. The same judicial panel had previously addressed the ambiguity surrounding the legality of cryptocurrency trading in India, requesting clear directives from the government in February 2022 to outline whether such activities were lawful and to provide an enforcement roadmap.
Despite these inquiries, the government’s response in January 2024 indicated that deliberations on cryptocurrency regulation are still ongoing, leaving many questions unanswered.
