The Supreme Court of India has expressed frustration over the government’s continued delays in establishing clear crypto regulations.
They described Bitcoin trading as a “complex” variety of hawala. “Hawala” refers to an informal mode of transferring money. A bench of Justices Surya Kant and N Kotiswar Singh made these remarks in a bail hearing for Shailesh Babulal Bhatt (who was arrested for doing illegal trading of bitcoin).
India’s court criticizes government for crypto regulatory delays
Supreme Court judges Surya Kant and N Kotiswar Singh were highly annoyed by the fact that the government had not established clear regulations on crypto. At the bail hearing, the judges said that the court had requested clarification from the government on its virtual currency policy two years ago in an earlier case. There has been no follow-up on the matter since then.
Justice Surya Kant addressed the matter squarely and stated that maintaining set rules will avoid legal issues caused by the use of cryptocurrency. He confessed that he did not even know anything related to Bitcoin.
In a statement shared by the Financial Express, Justice Kant compared Bitcoin trading in India to “a more sophisticated version of the Hawala system.” Hawala refers to an illegal money transfer system that operates outside of traditional banking channels and is often associated with money laundering in India.
The court’s comments came during the bail plea hearing of Shailesh Babulal Bhatt, who was arrested on August 14 last year and has remained in jail since. Bhatt is challenging the Gujarat High Court’s February 25 decision denying him bail.
His legal representative, senior lawyer Mukul Rohatgi, argued that Bitcoin trading is not illegal in India. This is especially after the Supreme Court previously struck down a Reserve Bank of India circular that had restricted banking services to crypto businesses.
Legal ambiguity in India despite taxation framework
India’s tactic in dealing with cryptocurrency is to set a very high tax on crypto transactions and refuse clarity on the regulatory framework. As it stands right now, crypto investors are subject to 30% in taxes on the profits from the buying and selling of trades, plus 1% TDS on transactions exceeding (clearly defined limits).
The lack of clarity is hampering any legitimacy there is for either individual traders or the business crypto community in that country. The exchanges are backed by regulation but, for the most part, are not regulated in any clear fashion with respect to the law.
At the hearing, senior attorney Mukul Rohatgi highlighted that Bitcoin is recognized globally. He highlighted that in certain nations, one can purchase vehicles in cash using cryptocurrency. He informed that one Bitcoin was equivalent to approximately ₹82 lakh, but he also admitted that he had no idea about how trade is conducted.
Although Rohatgi claims that cryptocurrency trading is legal now since the Supreme Court put on hold the RBI’s 2018 directive restricting banking services for crypto firms, individuals are still criminally prosecuted for Bitcoin trading.
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