Supreme Court Calls For Urgent Cryptocurrency Regulatory Framework

HomeNews* The Supreme Court of India called current cryptocurrency regulations “completely obsolete” during a Friday hearing.

• Justices highlighted a need for new laws to address challenges linked to digital assets like Bitcoin.
• The case concerned Gujarat businessman Shailesh Babulal Bhatt, accused in several crypto-related fraud cases.
• The court emphasized that enforcement is difficult due to non-compliant platforms and missing documentation.
• Previous requests from the Court for government action on crypto regulation have not yet led to a legal framework. On Friday, the Supreme Court of India addressed the urgent need for updated laws on cryptocurrencies. The remarks came during a hearing involving Shailesh Babulal Bhatt, a Gujarat-based businessman charged in multiple fraud cases related to digital currencies like Bitcoin.

• Advertisement - A bench of Justices Surya Kant, Dipankar Datta, and Vijay Bishnoi called current regulations outdated and unable to handle digital asset misuse. They pointed to a gap in the law, noting that newer issues surrounding cryptocurrencies are not covered by existing provisions.

Senior advocates Siddharth Dave and Mukul Rohatgi, representing Bhatt, reminded the Court that it had earlier asked the government to clarify its stance on cryptocurrency regulation. Justice Kant recalled that the government had previously said it was monitoring international developments, but no regulatory action had followed. Quoting during the hearing, Justice Kant said, “There exists a grey area in the field of bitcoin/cryptocurrency regulation and the existing laws are completely obsolete. They cannot address this issue.”

Additional Solicitor General Aishwarya Bhati stated the present case focused on alleged criminal misuse of cryptocurrency, specifically in fraud and extortion. She explained, “He initially claimed to be an investor, but has shown no documents to support this. His is a case purely of extortion.” Bhati also described difficulties in enforcing compliance, noting that Know Your Customer (KYC) rules now apply to Bitcoin wallets, but platforms lacking KYC still pose problems.

Advocate Rohatgi argued that Bhatt had cooperated with investigators, appearing before agencies 15 times by August 2024. He added that Bhatt had filed complaints against local police for extortion and kidnapping tied to Bitcoin, with subsequent retaliatory cases filed against him, although he had not been formally charged in those cases.

The Court stated that while it would decide on Bhatt’s case in July, the primary concern remained the lack of a clear regulatory framework for cryptocurrencies. Justice Kant said, “This case we will resolve either way… our problem is (regarding the regulatory framework)… do something about that.”

In previous hearings, the Supreme Court had warned against a total ban on digital currencies and called for “intelligent regulation.” The Court compared unregulated Bitcoin dealings to “hawala operations,” which refers to informal money transfers outside regular banking channels.

• Advertisement - Earlier rulings in November 2023 and April 2025 established that cryptocurrency rules should come from Parliament, not the judiciary. In January 2024, the Court granted temporary protection in a similar case and directed the government to make its position clear, but comprehensive crypto legislation has not yet materialized.

The matter will return to the Court in July for further review.

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