Spell out stand on bitcoin: Supreme Court to government

Satya Prakash

New Delhi, February 25

The Supreme Court on Friday asked Centre to clearly spell out its stand on the legality of bitcoins in the absence of any regulations dealing with cryptocurrencies in India.

“Is it illegal or not…You have to make your stand clear,” a Bench of Justice DY Chandrachud and Justice Surya Kant told Additional Solicitor General Aishwarya Bhati during hearing of a case involving 87,000 bitcoins wherein the accused was not cooperating with the investigation despite multiple summonses.

“We will do that My Lords,” Bhati replied during hearing on a plea by an accused in the GainBitcoin scam — which is said to be to the tune of Rs 20,000 crore. Extending the interim protection from arrest given to the accused, the Bench asked him to cooperate with the probe and posted the matter for hearing after four weeks. It also asked the investigating officer to file a status report showing the cooperation extended by the accused.

The government is said to be working on a crypto regulatory framework, but nothing concrete has come out so far. While presenting this year’s Union Budget, Finance Minister Nirmala Sitharaman had announced that income from digital asset transfers would be taxed at a rate of 30 per cent and no deductions and exemptions would be allowed. The RBI had restrained the banking system from aiding such trade in private digital currencies. But the decision was quashed by the Supreme Court in 2020.

In its March 4, 2020, verdict, a three-judge Bench headed by Justice Rohinton F Nariman (since retired) had allowed banks and financial institutions to provide services related to cryptocurrencies — digital currencies in which encryption techniques are used to regulate generation of currency units and verify transfer of funds, operating independently of a Central bank.

It had set aside the RBI’s April 6, 2018, circular which prohibited the entities regulated by the Central bank from providing any service in relation to virtual currencies such as bitcoin on the ground of “proportionality”.

In 2013, the RBI had in an advisory cautioned users, holders, and traders of virtual currencies, including bitcoins, about the potential financial, operational, legal, customer protection and security-related risks that they were exposing themselves to.

Govt working on crypto regulatory framework

• The top court was hearing a case involving 87,000 bitcoins wherein the accused in the GainBitcoin scam was not cooperating with the investigation despite multiple summonses
• The government is said to be working on a crypto regulatory framework, but nothing concrete has come out so far