The Orissa High Court has asked the Odisha government to clarify the legal status of cryptocurrency in India, saying the issue has broad implications for cybercrime cases, financial fraud investigations, and money-laundering prosecutions. The court’s move comes while hearing petitions from individuals whose bank accounts were frozen over alleged crypto-related transactions.
A single judge bench led by Justice S.K. Panigrahi took up the petitions filed by four people after the Sub-Divisional Judicial Magistrate (SDJM), Balangir court refused to de-freeze their accounts, which were seized following FIRs at the Cyber Crime and Economic Offences police station in Balangir.
Court Wants Clear Legal Position on Cryptocurrency
During the hearing, the court noted that neither the petitioners nor the government was able to clearly explain whether cryptocurrency should be regarded as legal, illegal, regulated, or otherwise under current Indian law.
The state counsel conceded that he was “not in a position to render effective assistance” on this fundamental question, prompting the court to seek authoritative clarification from the government. The judge stressed that a clear stance is necessary because the classification of cryptocurrencies affects how cyber offences, frauds and cross-border financial crimes are investigated and prosecuted.
Experts Asked to Assist the Court
Recognising that the matter involves both legal and technical dimensions, the court has asked several officials to assist in the next hearing scheduled for February 26, 2026:
- The Superintendent of Police, Balangir has been directed to appear in person.
- The nodal officer of the Cyber Cell, or another officer knowledgeable about cryptocurrency platforms, blockchain technology, digital wallets and the regulatory regime governing virtual digital assets, has also been asked to assist the court.
These officers are expected to address questions such as:
- What the current legal status of cryptocurrency is in India.
- Whether any statutory prohibitions apply to its possession, trade or transfer.
- How existing regulatory frameworks govern digital assets.
- What investigation and prosecution mechanisms apply to alleged crypto offences.
- The specific intelligence or basis for the FIRs that led to the account seizures.
Why This Matters
Justice Panigrahi emphasised that the legal uncertainty surrounding cryptocurrency is not a mere academic exercise, but has “significant implications” for how law enforcement handles cyber offence cases, financial fraud, money laundering and cross-border digital transactions. Without a definitive legal position, courts, police and regulators face challenges in handling cases involving digital assets.
India’s legal framework for cryptocurrency, including how virtual digital assets are regulated by the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) or other authorities, has been evolving. While some courts in India — including a past Orissa High Court ruling — have said that mere dealing in cryptocurrency itself is not an offense under specific financial laws, broader legislative clarity on criminal liability and regulatory norms remains unsettled.
The Orissa High Court’s request for government clarity could influence how future cases involving alleged crypto offences are handled across the country.
