The Supreme Court of India has called on the Central Government to explain its failure to establish definitive cryptocurrency regulations. During a recent hearing, the court raised concerns about the government’s inaction regarding the formulation of crypto policies.
This issue emerged on Monday in relation to a case involving a petitioner accused of cryptocurrency fraud.
A bench consisting of Justices Surya Kant and N Kotiswar Singh remarked that unregulated Bitcoin trading resembles an updated version of Hawala transactions. According to local reports, the justices indicated that implementing regulations could improve oversight of the sector and mitigate its potential for misuse in criminal activities.
“Why does the Centre not come out with a clear-cut policy on regulating cryptocurrency?” the court inquired on Monday. “There is a parallel under-market for it, and it can affect the economy. By regulating cryptocurrency, you can monitor the trade.”
Supreme Court Warns Against Banning Crypto
The court further noted that it had sought clarification on India’s approach to digital assets nearly “two years ago.”
The bench suggested that prohibiting cryptocurrencies would not be a prudent course of action, advocating instead for regulatory measures.
“Nobody is saying to stop it, as that wouldn’t be wise for the economy,” the court stated. “Banning might mean ignoring reality. Instead, why not consider regulation?”
(Shailesh Babulal Bhatt v. State of Gujarat & Another)
Justice Kant: In one of the matters, almost two years back, I made an observation and called upon the learned Attorney General to determine whether any action was being taken to regulate cryptocurrency.
He responded that we can’t.… pic.twitter.com/OTcDVdlPbf
— Bar and Bench (@barandbench) May 19, 2025
Moreover, the court highlighted the importance of consulting experts on this issue. “We aren’t experts. Experts would evaluate it, but some steps toward regulation and oversight are necessary,” they said.
The court also pointed out that the 30% tax on Bitcoin trading profits implies some degree of “legal recognition.” “If it is acknowledged in this way, why not regulate it?” they asked.
Regulatory Inertia Amidst Bitcoin Trading Surge
This isn’t the first time that India’s Supreme Court has addressed the government’s lack of responsiveness regarding cryptocurrency regulations.
Earlier this month, legal authorities underscored the growing gap between the surge in Bitcoin trading and the absence of suitable regulations. The same two-judge bench reiterated that the status of Bitcoin trading remains ambiguous in India.
In February 2022, the court urged the government to clarify the legality of cryptocurrency trading in India and to draft a comprehensive regulatory roadmap.
However, in January 2024, the Central Government responded to the court’s inquiries, stating that a decision on crypto regulation was still outstanding.
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