Indian Supreme Court Calls for Bitcoin Regulation

Following the receipt of a petition which requests that Bitcoin be regulated and made accountable to the exchequer, the Supreme Court of India has called upon the government to address the matter.

A local Indian newspaper reported that three justices of the country’s Supreme Court have sent notices to the ministries of Finance, IT, and Law and Justice, as well as the market regulator (SEBI) and the Central Bank (RBI), asking them to respond to the petition.

The petition in question raises a series of concerns about the cryptocurrency and the government’s stance on it, stating:

“The lack of any concrete [control] mechanism pending the regulatory framework in said regard has left a lot of vacuum and which has resulted in total unaccountability and unregulated Bitcoin (crypto money) trading and transactions.”

In addition, the document lists a series of issues and concerns in regards to the digital currency, chief among them the fact that the anonymity and cross-border nature of Bitcoin mean it is untraceable and can be used for tax evasion purposes and by ransomware attackers.

The petition also points out that the number of Bitcoin users in India is on the rise; approximately 500,000 citizens are already holding Bitcoin while exchanges add an addition 2,500 users on a daily basis. This steady increase of an unregulated digital asset could negatively impact the market value of other commodities.

To strengthen its case, the petition makes repeated references to countries like China and Russia, which are taking active steps to investigate and regulate cryptocurrencies:

“…certain countries have made Bitcoin (crypto money) subject to their respective tax regimes, while a few other countries have designated it as a commodity, thereby making Bitcoin subject to government regulation and accountable to the exchequer, but no such mechanism exists in India till date.”

India, by comparison, has hitherto adopted a more passive approach; RBI officials have made several statements expressing the institution’s discomfort with the cryptocurrency and their reluctance to adopt it, but a concrete official stance and regulations have yet to materialize.

A finance ministry committee established in April this year did recommend that the government ban digital currencies, and recently there were rumors about the possibility of shutting down agencies dealing with crypto, but so far there has been no official word from the government and relevant authorities. This lack of urgency in taking action seems to be the key reason behind the petition’s request for the Supreme Court’s intervention in pushing the case for Bitcoin regulation.