India’s Top Court Demands Clarity as Crypto Chaos Grows Amid Legal Loopholes

India’s Supreme Court has called on the central government to break its silence on cryptocurrency regulations, expressing frustration over the lack of a concrete policy framework. During a bail hearing on Monday, Justices Surya Kant and N. Kotiswar Singh raised concerns about the unregulated nature of crypto trading in the country, warning that a thriving “parallel under-market” could pose serious economic risks.

The judges urged the Centre to step in with a definitive stance on digital asset regulation. “By regulating cryptocurrency, you can monitor and control the trade,” they said, emphasizing that the government’s inaction is allowing illicit transactions to flourish.

Justice Kant went a step further, likening Bitcoin trading to the illegal “Hawala” network—a shadow money transfer system banned in India. “It’s more or less an illicit trade,” he said while presiding over a case involving Gujarat resident Shailesh Babulal Bhatt, accused of crypto-related fraud.

Additional Solicitor General Aishwarya Bhati, representing the Centre, asked for time to seek directions. Bhati claimed Bhatt was a major BTC aggregator in Gujarat, allegedly luring investors with false promises of high returns. But the court said it couldn’t determine whether Bhatt was a scammer or a victim himself—underscoring the legal vacuum surrounding digital assets in India.

Despite earlier plans to release a comprehensive crypto policy paper by September 2024, no formal policy has surfaced. A senior government official previously attributed the delay to internal deliberations over how India should position itself in light of evolving crypto frameworks, particularly under more permissive U.S. policies during President Trump’s term.

As regulatory uncertainty drags on, the Supreme Court’s call may finally force the government to confront the crypto grey zone—before it turns into a black hole.