The Supreme Court describes trading in Bitcoin in India as akin to a “refined way of Hawala business”

The Supreme Court on Monday described trading in Bitcoin in India as akin to a “refined way of Hawala business,” expressing displeasure over the Centre’s continued inaction

The Supreme Court on Monday described trading in Bitcoin in India as “a refined way of Hawala business” and expressed displeasure over the Centre’s continued inaction in framing a clear regulatory framework for virtual currencies.

A bench comprising Justices Surya Kant and N Kotiswar Singh made the observation while hearing a bail plea filed by Shailesh Babulal Bhatt, who was arrested in connection with an alleged illegal Bitcoin trade. The court noted that despite its direction over two years ago asking the Centre to clarify its stand on cryptocurrency regulation, no substantial response has been filed.

“There are no regulations at present,” Justice Surya Kant remarked, lamenting the absence of a policy mechanism to govern such transactions.

Senior advocate Mukul Rohatgi, appearing for Bhatt, argued that trading in Bitcoin is not illegal in India, especially after the apex court had earlier quashed a Reserve Bank of India circular banning such transactions. Rohatgi submitted that Bhatt was wrongly arrested and pointed out the high value of Bitcoin, which he said was around ₹82 lakh at present.

Justice Surya Kant responded, “Though I personally don’t understand much about Bitcoin, all I know is there are some genuine and some fake ones. Trading in Bitcoin in India is like dealing with a refined way of Hawala business. There are no regulations.”

Additional Solicitor General Aishwarya Bhati, appearing for the Gujarat government and the Enforcement Directorate (ED), sought time to file a detailed response, asserting that the case involved more than just Bitcoin trading.

The bench granted 10 days to the state and the ED to file their replies and listed the matter for further hearing on May 19.

Bhatt, who was arrested on August 14 last year, has been in custody since then. He moved the apex court after the Gujarat High Court denied him bail on February 25.

Earlier, on February 25, 2022, the Supreme Court had asked the Union government to clarify whether cryptocurrency trading—such as Bitcoin—is legal in India. In response, the Centre told the court in January that it was still deliberating on a mechanism to regulate cryptocurrencies and investigate related offences.