The Supreme Court of India recently sought clarification from the Union government on the validity of crypto currencies such as bitcoin. A bench of the Supreme Court addressed this question to Additional Solicitor General Aishwarya Bhati in a case involving 87,000 bitcoins and thousands of investors in a Multilevel Marketing (MLM) fraud.
Due to the lack of a legal framework for cryptocurrency, charges involving it are handled under laws governing foreign exchange, money laundering and terror funding, among other things.
What Did The Apex Court Say On This?
The ED’s Additional Solicitor General Aishwarya Bhati spoke out against the charges being dropped against the defendants, telling the court that the case included 87,000 bitcoins. She further stated that the defendant was refusing to cooperate with the inquiry. She informed the court that despite issuing summons, the accused had not come before the agency to assist with the investigation.
“We would like you, as the Union of India, to state on the record the rule as regards bitcoin and cryptocurrency,” Justice Surya Kant said to Bhati. “Is it still considered a crime? We will do it,” Bhati responded in response.
The law officer requested that the court lift the stay on the accused’s arrest, citing multiple charges filed against him around the country. The Supreme Court, on the other hand, demanded that the accused “appear within two days before the Investigating Officer in the Directorate of Enforcement and help with the inquiry by being present as and when called upon.”
“The ad-interim injunction prohibiting arrest shall continue until the next date of listing,” the court declared, “depending on the petitioner cooperating fully in the investigation.”
Crypto Conundrum Continues?
Cases concerning cryptocurrency are handled under various laws due to the lack of a consistent legal framework. The GainBitcoin case against the Bhardwaj family, for example, is being investigated under the Money Laundering Prevention Act (PMLA).
The ED was unable to show that contaminated money was transformed into untainted money due to a lack of experience in cryptocurrency inquiry. As a result, the court granted the accused bail and ordered the enforcement agency to refrain from taking coercive action against him.
The Reserve Bank of India (RBI), India’s central bank, outlawed cryptocurrencies in 2018 by instructing banks not to provide ordinary banking services to crypto transactions. The RBI ruling was overturned by the Supreme Court of India in early 2020, partly because no existing legislation made them illegal.
Following the April 2020 Supreme Court judgment, the RBI’s stance on cryptocurrencies became more permissive, allowing crypto businesses to get capital. The RBI reaffirmed in January 2021 that bitcoin is not outlawed in India in response to a complaint brought by the Internet and Mobile Association of India (IAMAI), which also represents crypto exchanges.
More recently, the Indian government proposed a high 30 per cent tax on crypto income and a 1% tax on all crypto transactions in its budget plans for 2022-23. However, it did not say whether digital assets are lawful or not, instead of delaying the judgment until after “consultations”.
