In a sharp rebuke of India’s ambiguous stance on cryptocurrency, the Supreme Court on Monday likened Bitcoin trading to a “refined form of Hawala,” a traditional and often illicit money transfer system. The remark emerged during a bail hearing for Shailesh Babulal Bhatt, who faces charges linked to illegal Bitcoin transactions.
Presiding over the hearing, Justices Surya Kant and N. Kotiswar Singh voiced concern over the Indian government’s persistent inaction on regulating virtual currencies. They criticized the Centre for its failure to clarify the legal status of cryptocurrencies, despite a Supreme Court directive issued two years ago urging the government to formulate a clear framework.
Justice Kant acknowledged his limited personal understanding of Bitcoin but pointed out that much of the current confusion stemmed from a lack of regulation. “Had there been a proper regulatory mechanism, such issues would not arise,” he observed.
Defending Bhatt, senior advocate Mukul Rohatgi argued that Bitcoin trading is not illegal under Indian law. He reminded the bench that the Reserve Bank of India’s prior restrictions on crypto transactions had been overturned by the Supreme Court. Rohatgi also emphasized the global legitimacy and high market value of Bitcoin, noting its valuation at Rs. 82 lakh (approximately $97,000) as of Sunday.
However, Additional Solicitor General Aishwarya Bhati, representing the Gujarat government and the Enforcement Directorate, contended that Bhatt’s case involves more than just cryptocurrency trading. She stated that the charges extend to fraudulent financial activities and other criminal offenses allegedly connected to Bhatt’s Bitcoin dealings.
Bhatt, arrested on August 14, 2024, has been in custody since. He is appealing a February 25 decision by the Gujarat High Court, which denied him bail. His case is one of several involving alleged misuse of cryptocurrencies in India. In a previous matter, the Court addressed a string of FIRs against an individual accused of duping investors by promising high returns through Bitcoin investments.
The Centre had earlier admitted in January 2024 that it was still undecided on how to regulate cryptocurrency and address associated crimes. The Supreme Court had also asked the government in February 2022 to confirm the legality of trading digital assets like Bitcoin—a request that remains unanswered.
The Court has now directed the Gujarat government and the Enforcement Directorate to respond to Bhatt’s bail application within ten days. The matter will be heard again on May 19, 2025.
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