The Supreme Court of India has released a destructive critical of the central government’s motion in regulating cryptocurrencies. Indian judicial authorities have warned that the lack of a legal framework has created a ripe ecosy system for misuse and financial fraud. The Supreme Court, on May 19, 2025, compared unregulated crypto trading to a more sophisticated version of the Lost, a century non -informal currency transfer system that was often used for the launch of non -prohibited funds.
A bench made up of Justices Surya Kant and N Kotiswar Singh made comments while hearing a bail petition for Shailes Babulal Bhatt, a Gujarat-based businessman accused in a case of multi-state cryptocurrency fraud. Although the hearing was a procedure in nature, the court took the opportunity to issue a broader advice on vacuum in Indian digital asset policy.
“No one says to stop it … The ban can close your eyes to the reality of the earth. But what about regulating it?” The bench questioned, emphasizing the irony of the government’s stance – where crypto is not legally soft or prohibited, but taxable.
The court repeats demand for regulatory clarity
The Court of the Union government reminds him that it has requested a policy direction on digital currencies nearly two years ago and expressed frustration that the situation remains unchanged. Justice Kant noted that India could not open a “blind eye” in the evolution of global financial technologies and should find a middle ground between prohibition and permission.
Bench statements have drawn sharp attention to the ongoing ambiguity surrounding the legal status of digital assets in India. While revenues from cryptocurrency transactions are taxed at 30%, with a 1% TDS applied to each trade, there is no formal law to manage the release, trade, or investigation of crypto -related activities.
Additional Solicitor General Aishwarya Bhati, who represents the government, has asked for time to obtain instructions, but the court’s tone reflects the growing judicial impatience. It also raises concerns about the challenges and implementation of challenges, noting that law enforcement may be left unevenly in the absence of formal definitions and procedures.
“If tomorrow someone asks, ‘Prove what this owner is,’ How can we prove it?” asked the bench. “We are not an expert. Experts need to check it out, but some steps to fix it is necessary.”
Implementing the legal ambiguity of the clouds
Senior Advocate Mumul Rohatgi, which is focused for Bhatt, noted that the Supreme Court was in 2020 that struck a circular Reserve Bank of India (RBI) that effectively hinder banks from facilitating crypto transactions. He fought that in the absence of a legislative ban, the arrest of Bhatt was “unfair,” especially after the Enforcement Directorate (ED) completed its investigation without acting during the investigation.
The court has reviewed this concern, which has been querying the logic of arresting Bhatt post-investigation while exaggerating alarms about uneven application of law enforcement in the crypto space.
Bhatt’s case reigned in the debate on crypto trading criminality under the current legal India regime. His case is one of the few recent high-profile investigations related to fraud throughout India, where law enforcement agencies struggle to navigate a complex legal and technological environment.
Global regulation development features India’s delay
India’s concern stands in contrast to other economies that have advanced in legislative and regulatory measures. The European Union (market in crypto-assets) framework, which takes place in 2025, provides comprehensive policies for the release of crypto, stablecoins, and service providers. In the US, the SEC and CFTC especially determine the jurisdiction lines and implementation paths for digital possessions, even through legal challenges and guidelines.
In India, however, the draft cryptocurrency and regulation of the official digital currency bill, first prepared in 2021, has not been introduced to Parliament. Despite many discussions, policy papers, and public consultations, the bill remains in Limbo -leaving crypto exchanges, investors, law enforcement, and the judiciary that navigates a color -colored zone.
Limbo regulation disrupts industry and administration
The industry itself has grown its voice in the need of clarity. The Indian crypto sector, which is once one of the most activated in the world, has seen a move of companies and talents to constituents such as Dubai and Singapore. Replaces such as the Coindcx and Wazirx continue to operate indoors, but strictly adhering to burdens that do not include right -based framework.
At the same time, the government emphasized the dangers of crypto trading. The RBI, under the Governor Shaktikanta Das, has repeatedly undermined volatility, investor protection concerns, and potential threats to macroeconomic stability. The flagship of India’s digital rupee, launched as a central digital currency (CBDC), is promoted as a safer, supported by the state in decentralized tokens such as Bitcoin and Ethereum.
However, Dichotomy remains unresolved: state tax is aggressive of digital assets and warns against their use, but refuses to identify them legally or provide investor protections.
Previous judicial pressure and the need for a federal crypto agency
This is not the first time the Supreme Court has forced the government for clarity. In July 2023, another bench pointed to the center to explain whether it planned to create a dedicated federal agency for investigating crypto -related crimes. It calls the lack of both a framework of regulation and authority of implementation “Kapus -pags,” especially amid the rising chances of cyber fraud, money laundering, and prohibited trade involved with digital ownership.
More than 90,000 cybercrime cases were registered in India in 2023, according to the National Crime Records Bureau, and a growing percentage of those involved in crypto elements. But agencies such as ED, CBI, and state cyber units are left to operate without equal technological techniques or technological capabilities.
What will happen next?
In the latest comments of the Supreme Court, the pressure has again raised the Union government to act clearly. The possibility of crypto law that has been attacked during the Parliament’s monsoon session is widespread -haka.
For investors and startups in the sector, the lack of clarity continues to be a hindrance to capital streams and change. Legal experts suggest that until a comprehensive law is introduced, both courts and implementation agencies will continue to grample inconsistencies -detrimental to both the delivery of justice and market confidence.
While the world covers the regulation of digital finances, India has found itself at a branch. The Supreme Court’s warning may prove to be a point of view -or another reminder lost to bureaucratic immortality.
Also Read: The FTX to distribute more than $ 5 billion to creditors in the second payout round starting May 30, 2025
Denial: The information provided to Alexablockchain is for information purposes only and does not generate financial advice. Read the complete decline here.
Image credits: Canva