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The Supreme Court on Monday likened Bitcoin trading in India to “a refined way of Hawala business” and expressed concern over the absence of a clear regulatory framework on cryptocurrency by the Union government. The remarks were made by a bench comprising Justices Surya Kant and N Kotiswar Singh during a hearing on a bail plea filed by Shailesh Babulal Bhatt, accused in a Bitcoin-related case. Senior advocate Mukul Rohatgi, representing Bhatt, argued that trading in Bitcoin is not illegal in India, particularly after the apex court had, in 2020, quashed the Reserve Bank of India’s circular that had prohibited banks from dealing in cryptocurrencies. Rohatgi maintained that the alleged transactions did not constitute any offence under existing laws. However, the bench noted the regulatory vacuum surrounding digital currencies and said the Centre’s delay in enacting a concrete regime has contributed to confusion and potential misuse. “Trading in Bitcoin appears to be a sophisticated form of Hawala. In the absence of regulation, it raises serious concerns,” the bench observed. The court has now sought replies from the Gujarat government and the Enforcement Directorate (ED) within 10 days and scheduled the matter for further hearing on May 19. This development comes nearly three years after the Supreme Court, on February 25, 2022, had directed the Centre to clarify the legal status of cryptocurrency trading in the country. Despite discussions and draft proposals, the government has yet to pass a comprehensive law on the subject. As India continues to grapple with the rapid rise of virtual currencies, the court's remarks underline the urgent need for regulatory clarity to prevent misuse and ensure financial integrity.
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