The Supreme Court of India compares Bitcoin transactions to Hawala, emphasizing the need for a clear legal framework for cryptocurrencies.
The Supreme Court of India has created a wave of controversy by making a notable observation about the cryptocurrency market, in a context where the country has not yet established a comprehensive legal framework for digital assets. According to information from PTI, Judges Surya Kant and N. Kotiswar Singh compared Bitcoin transactions to "a sophisticated form of Hawala" – a traditional informal money transfer method that has been controversial in the South Asian region.
This statement was made during the bail hearing of Shailesh Babulal Bhatt, an accused in a Bitcoin transaction-related case. Notably, the judges expressed dissatisfaction with the central government of India's failure to issue specific regulations on cryptocurrencies, creating a vague legal environment with potential risks.
Legal Contradictions and Regulatory Practices
While defense lawyer Mukul Rohatgi asserted that cryptocurrency transactions are not considered illegal under current Indian law, the court still expressed concerns about the consequences of the lack of a legal framework. In fact, the court requested the Gujarat state authorities and the Enforcement Directorate (ED) to submit a response document within 10 days, and set the next hearing for May 19.
This situation becomes even more ironic when considering India's role on the international stage. Despite the lack of a domestic legal framework, the country has played a crucial role in promoting global discussions on cryptocurrency regulation during its G20 presidency in 2023. Finance Minister Nirmala Sitharaman has led efforts to build a comprehensive management roadmap, collaborating with international organizations like the IMF and FSB.
While there are no specific laws on cryptocurrencies, India has applied high taxes on digital asset transactions – 30% on profits without loss or expense deductions, along with a 1% source tax for transactions exceeding the specified threshold.
