India's Supreme Court Likens Bitcoin Trading to Hawala, Urging the Government to Establish Clear Crypto Regulations.

The Supreme Court of India has compared Bitcoin trading to a modern version of illegal money transfers, like Hawala. These remarks were made during a bail hearing for

India's Supreme Court drew an interesting parallel between Bitcoin trading and a modern rendition of the illegal money transfer system known as Hawala. These observations were made during a bail hearing for Shailesh Babulal Bhatt, who faces charges of engaging in illegal Bitcoin trading.

The judges also expressed their irritation at the Indian government for an outstanding lack of progress in setting clearer rules for crypto.

“Trading in Bitcoin appears to be a sophisticated form of Hawala. In the absence of any regulation, it raises serious concerns,” the bench remarked.

The apex court had sought an update from the government on its policy on cryptocurrencies in a similar case two years ago, following multiple FIRs against a man for allegedly duping investors with promises of high returns from Bitcoin trading.

However, there has been no progress on this front yet. Pointing this out, Senior Lawyer Mukul Rohatgi, who was appearing for Bhatt, stated that Bitcoin trading is not illegal in India as the Supreme Court had already struck down the RBI circular that barred banks from dealing in cryptocurrencies.

But Justice Surya Kant responded that while he does not fully understand how Bitcoin works, the court has been demanding that the government bring clear rules to avoid such confusion. He believes that while some Bitcoins are genuine, others are fake.

“Without any proper regulations, Bitcoin trading in India is like a sophisticated version of Hawala. But they say one BTC can buy a car in some countries and it is not a small amount. It is around ₹82 lakh,” Rohatgi added.

The Gujarat government and ED sought more time from the Supreme Court over the case, saying that it goes beyond Bitcoin trading and they will take 10 days to reply. The next hearing is now on May 19.

Bhatt has been in jail since August 2023, appealing a February order from the Gujarat High Court that denied him bail. He was arrested in July 2023 by the ED in an old case.

India has been planning to introduce crypto regulations for a long time now and is finally making some progress. Earlier this year, India imposed a 30% tax on crypto profits and also included virtual asset transactions in the Prevention of Money Laundering Act. However, a broader regulatory framework is still needed.