The Supreme Court of India has compared Bitcoin trading to a modern version of illegal money transfers, like Hawala. These remarks were made during a bail hearing for Shailesh Babulal Bhatt, who was accused of illegal Bitcoin trading. The judges also criticized the Indian government for not setting clearer rules for crypto yet.
“Trading in Bitcoin appears to be a sophisticated form of Hawala. In the absence of regulation, it raises serious concerns,” the bench remarked.
In a similar case two years ago, multiple FIRs were filed against a person who was accused of tricking investors with promises of high returns from Bitcoin trading. The court had asked the government to explain its policy on cryptocurrencies. However, there have been no updates since then.
Senior lawyer Mukul Rohatgi, who was representing Bhatt, argued that Bitcoin trading is not illegal in India as the Supreme Court has already turned down the RBI’s circular that restricted banks from dealing in cryptocurrencies.
Government Urges Clearer Rules
Justice Surya Kant responded by saying that while he does not fully understand how Bitcoin works, the court has been demanding that the government bring clear rules to avoid confusion.
He believes that while some Bitcoins are genuine, others are fake. Therefore, without proper regulations in place, Bitcoin trading in India is like a sophisticated version of Hawala, he said. However, Rohatgi argued Bitcoin has real value, saying you can even buy a car with one BTC in some countries, which is currently worth around ₹82 lakh.
The Gujarat government and ED asked the Supreme Court for more time over the case, saying that it goes beyond Bitcoin trading and has been given 10 days to reply. The next hearing is set for May 19. Bhatt has been in jail since August 2023, appealing a February order from the Gujarat High Court that denied him bail.
Comprehensive Regulations Needed
India has taken some steps forward, like a 30% tax on crypto profits and including virtual asset transactions under the Prevention of Money Laundering Act in March 2023. However, a broader regulatory framework is still needed.
