India’s Supreme Court has raised serious concerns over the country’s lack of oversight in Bitcoin trading, drawing comparisons between unregulated crypto transactions and a sophisticated form of Hawala. The observation came during a recent bail hearing in a crypto-related case, as reported by local media outlets.
The bench, comprising Justices Surya Kant and N Kotiswar Singh, questioned the absence of a clear regulatory framework for digital currencies, warning that this legal vacuum has created space for ambiguity, misuse, and potentially unlawful activity.
These remarks were made in the context of the bail hearing for Shailesh Babulal Bhatt, who has been in custody since August 2023 on charges related to illegal Bitcoin trading. His defence, led by senior advocate Mukul Rohatgi, argued that Bitcoin trading is not inherently illegal in India, referencing the Supreme Court’s 2020 ruling that nullified the Reserve Bank of India’s ban on banking services for cryptocurrency platforms.
In response, Justice Surya Kant admitted to having a limited technical understanding of Bitcoin but asserted that, without proper regulation, such trading resembles “a sophisticated form of Hawala.” Hawala is an informal and often unlawful money transfer system outside official banking channels, commonly used to bypass legal financial scrutiny.
The court further expressed concerns over the lack of progress in cryptocurrency regulation, noting that this is not the first time the issue has been raised. Two years prior, the judiciary had requested the central government to clarify its policy on virtual currencies, but no substantial developments have occurred, complicating the legal handling of cryptocurrency cases.
Notably, the Karnataka High Court, led by Justice M. Nagaprasanna, recently ordered the immediate blocking of access to all domain names associated with Proton Mail, an encrypted email provider based in Switzerland. This ruling, issued on April 29, is enforced under India’s Information Technology Act of 2008 and reflects the increasing conflict between privacy-focused tech companies and government surveillance initiatives in India.
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