Bitcoin Trading in India Is Akin to Running a "Refined Way of Hawala Business", Says Supreme Court

The Supreme Court of India, on Monday, said that Bitcoin trading in India was akin to running a “refined way of Hawala business.” This statement came during the hearing of a bail application filed by Shailesh Babulal Bhatt, who was arrested by the police for alleged illegal Bitcoin trading.

The Supreme Court of India on Monday compared Bitcoin trading in the country to a "refined way of Hawala business." The apex court made this striking observation while hearing the bail application of Shailesh Babulal Bhatt, who is embroiled in a case of alleged illegal Bitcoin trading.

The case was being heard by a bench of Justices Surya Kant and N Kotiswar Singh.

As the bail application came up for hearing, the apex court expressed its displeasure with the Centre for its lack of response regarding a clear regulatory framework for virtual currencies.

This observation came after the apex court had, two years ago, asked the government to clarify its stance on Bitcoin trading and the regulation of virtual currencies.

However, despite repeated requests from the bench, the Centre has failed to provide a response.

"If there was some regulation, then there would be no problem in Bitcoin trading. But there is no regulation. It is a new way of doing Hawala business in a very refined manner. They (government) keep mum. They don't respond. They are not concerned with what is happening," Justice Surya Kant said.

The bench further noted that if there was no regulatory system, then it was bound to cause problems.

"I don’t understand much about Bitcoin but they (government) are not able to put up any regulations.

They (government) are not able to take a stand. Is it legal or illegal? They (government) don't know. How can they (government) be in government if they don't know what is legal and what is illegal?" Justice Surya Kant added.

Earlier, Senior Advocate Mukul Rohatgi, appearing for the applicant, submitted that trading in Bitcoin was not illegal in India.

Pointing out that the case arose out of an FIR registered by the ED, Rohatgi said that the apex court had already quashed the RBI circular which had imposed restrictions on cryptocurrency transactions.

Highlighting the enormity of Bitcoin's value and the fact that it was being traded in several foreign countries, Rohatgi said that the value of one BTC was ₹82 lakh on Sunday.

However, Additional Solicitor General Aishwarya Bhati, appearing for the Gujarat government and the ED, said that the case went beyond the issue of Bitcoin trade.

Bhati told the apex court that the case involved other aspects of criminal activity, such as fraudulent transactions, which were linked to Bhatt's alleged involvement in illegal activities.

Bhatt, who was arrested on August 14, 2024, is currently in custody. He is challenging the Gujarat High Court's February 25 ruling, which denied him bail in the case.

The apex court is also hearing a case where multiple FIRs were registered against an individual who was accused of duping investors by inducing them to trade Bitcoin with promises of high returns.

In January 2024, the Centre told the apex court that it had not yet determined how to control cryptocurrencies and deal with crimes related to them.

Also, on February 25, 2022, the apex court had asked the Centre to clarify if the trading of cryptocurrencies like Bitcoin was legal in India.

The apex court has now ordered the Gujarat government and the ED to respond to Bhatt’s bail plea within ten days. The matter will now be heard again on May 19, 2025.