The court pointed out that while the government is taxing cryptocurrency transactions at a high rate, it has still not implemented any proper regulatory framework for them.
NEW DELHI: 19th May: The Supreme Court of India has expressed serious concern over the growing use of cryptocurrencies like Bitcoin in the country. While hearing a case related to an ongoing investigation into a Bitcoin transaction, a bench led by Justice Suryakant made strong observations about the unregulated nature of digital currencies.
The Government of India was represented by Additional Solicitor General (ASG) Aishwarya Bhatti during the hearing.
Justice Suryakant remarked, “This is a whole parallel economy running with such coins and is a danger to the economy of the country.”
The court pointed out that while the government is taxing cryptocurrency transactions at a high rate, it has still not implemented any proper regulatory framework for them.
Highlighting the inconsistency, Justice Suryakant further stated, “If you can tax it at 30%, also please regulate it as you have recognised it by taxing it.”
In response, ASG Aishwarya Bhatti told the bench, “We will take instructions my lord.” This indicates that the government may consider reviewing the issue of cryptocurrency regulation in the coming days.
On 5th May, The Supreme Court of India had an important discussion about the use of Bitcoin in India. Justice Surya Kant and senior advocate Mahesh Jethmalani shared their views on this digital currency during the courtroom exchange.
The topic came up as part of a larger case that touched on financial technologies and possible misuse of cryptocurrency.
Senior Advocate Mahesh Jethmalani explained how Bitcoin is already being widely used around the world.
He said, “People across the world are already using bitcoin.”
He also gave an example from Europe, saying, “In Europe, you can walk into a car showroom and buy a car using just one Bitcoin.”
To explain where Bitcoin came from, Jethmalani added, “It was created by someone from Japan who used a fake name.”
This refers to the mysterious figure behind Bitcoin, known by the pseudonym Satoshi Nakamoto. Despite its growing popularity, the real identity of the Bitcoin creator remains unknown.
Justice Surya Kant responded by expressing concern about the regulation and possible misuse of Bitcoin.
He said, “There is some system of rules that applies to this.”
This means that even though people are using Bitcoin, there should be a proper legal framework around it to control its usage.
He also pointed out that Bitcoin is not always safe or genuine. In his words, “Some Bitcoins are genuine, but some might not be. It has also become a possible way to do illegal business.”
In Previous Hearing
Earlier, the Supreme Court declined to entertain a petition seeking the creation of rules to regulate cryptocurrencies, observing that such decisions fall within the realm of policy-making and not judicial intervention.
A Bench comprising Justices B R Gavai and Augustine George Masih heard the matter. During the hearing, the petitioners’ counsel informed the court that numerous complaints relating to cryptocurrency had been filed across various parts of the country. They urged the court to direct the Centre to formulate regulatory guidelines in the absence of a specific law governing digital currencies.
Justice Gavai remarked, “This lies within the domain of policymakers. How can we issue such directions? We cannot lay down the law.”
The court advised the petitioners to approach the government with their concerns, stating, “The prayers made in the petition fall squarely within the jurisdiction of the legislature and the executive. In light of this, we are not inclined to entertain the petition.”
The Bench clarified that the petitioners were at liberty to approach the appropriate authorities to present their case.
In January last year, the central government had informed the court that it had not yet taken a final decision on regulating cryptocurrencies or on addressing offences related to them.
The petition had come up during the hearing of an unrelated bail plea involving a person accused of cryptocurrency-related fraud across multiple states.
At present, India imposes a flat 30% tax on gains from cryptocurrency transactions, but there is no clear law or regulatory framework governing the use, trading, or security of these digital assets. Experts and legal authorities have long argued that without proper laws, cryptocurrencies can be misused for illegal activities such as money laundering and terror financing.
Cryptocurrencies like Bitcoin and Ethereum are neither banned nor recognised as legal tender in India. Profits earned from crypto transactions are taxed at 30%, and a 1% Tax Deducted at Source (TDS) is applicable on every transaction. However, losses incurred from cryptocurrency trades cannot be offset against other income.
Since 2023, crypto exchanges and platforms are also mandated to comply with anti-money laundering (AML) regulations, which include verifying user identities and reporting suspicious activities to the Financial Intelligence Unit (FIU).
The Reserve Bank of India (RBI) continues to warn the public about the risks associated with investing in cryptocurrencies and is concurrently promoting its central bank digital currency—the Digital Rupee. Although a draft Bill to regulate cryptocurrencies was prepared in 2021, it is yet to be enacted.
Case Name: SHAILESH BABULAL BHATT Versus THE STATE OF GUJARAT AND ANR| SLP(Crl) No. 4036/2025 II-B
