The Supreme Court on Monday orally questioned why no regulation is being considered to govern cryptocurrency [Shailesh Babulal Bhatt v. State of Gujarat & Another].
A Bench of Justice Surya Kant and Justice NK Singh observed that no one is suggesting a complete halt to cryptocurrency, as that may not be wise for the economy, but emphasized the need for regulatory measures and oversight.
The Court added that the issue must be taken up in consultation with experts.
“In (another) matter, almost two years back, I made an observation and called upon learned Attorney General (and asked him), are you doing something to regulate this cryptocurrency? He came and said, ‘We can’t. There is international market, this and that’ … There are new kinds of mechanisms evolving for international trade also. Banning may be shutting your eyes (to) ground reality. But what about regulating it? … We aren’t experts. Experts would examine it, but some steps to regulate it and have an eye on it (are necessary),” the Court observed.
The Court also noted that the current taxation of Bitcoin trading profits at 30 per cent implies a form of legal recognition. If it is already acknowledged in this manner, why not regulate it, the Court asked.
Addressing Additional Solicitor General (ASG) Aishwarya Bhati, Justice Kant added that courts have been facing practical challenges while dealing with cryptocurrency cases.
“Tomorrow, somebody will ask me, you please prove – what is the asset? How are we going to prove it?” Justice Kant remarked.
ASG Bhati replied that she would seek instructions from the Central government on the matter.
The Court was hearing a plea in a case tied to allegations of cryptocurrency-related fraud spanning multiple States.
The litigant before the Court was accused of having abducted two employees of BitConnect in early 2018 and extorted 2,091 Bitcoins, 11,000 Litecoins, and ₹14.5 crore in cash from them, purportedly to recover losses incurred from his investment in the now-defunct cryptocurrency platform, M/s. Bit Connect Ltd.
During yesterday’s hearing, the Court asked ASG Bhati about the expected timeline for completing the investigation against the accused petitioner.
She replied that an updated report on the investigation’s progress, along with the Union’s position on cryptocurrency, would be submitted by July.
The Court noted that the larger issue of a policy on cryptocurrency can be dealt with separately. It added that the primary focus must be on the petitioner, as it was unclear from the records whether he was a victim or a perpetrator.
“That (Cryptocurrency regulation), we can deal with separately. We have to deal first of all with this gentleman (petitioner), because right now it is difficult to understand from the file whether he is victim or victimizer,” the Bench said.