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.
NEW DELHI: Today, 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.”
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.
Cryptocurrencies: Unregulated but Taxed
While India has no specific legislation regulating cryptocurrencies, the government has introduced several monitoring measures.
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.
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