New Delhi — The Supreme Court on Monday pulled up the Central Government over its prolonged inaction in regulating cryptocurrencies in India, particularly Bitcoin. A bench comprising Justices Surya Kant and N. Kotiswar Singh observed that the current situation—where no clear policy or regulatory regime exists—makes Bitcoin trading akin to a sophisticated version of the Hawala system.
The observations came during a hearing on the bail plea of Shailesh Babulal Bhatt, who was arrested for alleged involvement in illegal Bitcoin transactions. The bench recalled that it had earlier directed the Centre to clarify its position on virtual currencies, but no framework has yet been presented to the court.
“Refined Hawala”: SC’s Sharp Take on Bitcoin Transactions
Justice Surya Kant remarked, “You see, trading in Bitcoin in India is like dealing with a refined way of Hawala business. There are no regulations at present.” He also admitted limited technical understanding of Bitcoin but emphasized the urgent need for government oversight.
Senior Advocate Mukul Rohatgi, appearing for Bhatt, argued that Bitcoin trading is not illegal, citing the 2020 Supreme Court ruling that struck down the RBI’s circular banning banking services for crypto exchanges. He added, “Bitcoin has enormous value; on Sunday, it was worth ₹82 lakh,” while also conceding his limited grasp of crypto mechanics.
Justice Kant responded, “All I understand is there are some genuine Bitcoins and some fake ones. If there was a regulatory regime, such issues would not arise.”
Centre and ED Seek Time to Respond, Case Adjourned to May 19
Additional Solicitor General Aishwarya Bhati, representing the Gujarat government and the Enforcement Directorate (ED), sought time to file a detailed counter-affidavit. Bhati emphasized that the bail case was not just about Bitcoin trade but had broader implications.
The Supreme Court granted 10 days to the Gujarat Police and the ED to submit their response and listed the matter for hearing on May 19, 2025.
Bhatt, who has been in custody since August 14, 2023, is challenging the February 25, 2025, Gujarat High Court order denying him bail. He claims he is being wrongfully incarcerated despite the lack of regulatory clarity on cryptocurrency trade in India.
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Regulatory Vacuum Continues Despite Repeated Court Reminders
The case once again spotlights India’s regulatory paralysis on cryptocurrency. In January 2024, the Centre informed the apex court that it was still deliberating on creating a legal mechanism for regulating crypto assets and investigating related offences.
Notably, as far back as February 2022, the Supreme Court had asked the Centre to spell out whether cryptocurrency trading was legal in India—especially concerning Bitcoin and other virtual currencies used in high-risk investments. The absence of a formal framework has led to conflicting interpretations of legality, often leaving law enforcement and investors in limbo. The current SC intervention adds pressure on the government to present a long-pending policy and protect citizens from financial exploitation in the crypto space.