India’s supreme court urges government to regulate cryptocurrency

India’s Supreme Court questioned the government’s lack of regulatory clarity on cryptocurrencies despite imposing taxes on digital assets like Bitcoin.

According to the Indian legal news outlet LawChakra, the country’s Supreme Court expressed concern over the increasing use of Bitcoin (BTC) and other cryptocurrencies, which remain largely unregulated.

“This is a whole parallel economy running with such coins, and it is a danger to the economy of the country,” Justice Surya Kant reportedly said during a recent hearing related to an ongoing investigation into a Bitcoin transaction.

Kant said that while the government has implemented crypto taxation, it has failed to regulate the space.

“If you can tax it at 30%, also please regulate it as you have recognised it by taxing it,” the judge said.

Government says review may follow

The Additional Solicitor General of India — a senior legal officer representing the government of India — reportedly answered the request by saying that the government “will take instructions, my lord,” indicating that the government may consider reviewing the country’s current cryptocurrency regulation.

The report follows a May 5 hearing by the Supreme Court during which Kant and lawyer Mahesh Jethmalani shared their views on cryptocurrency. Jethmalani said that Bitcoin is already being used worldwide, noting that “in Europe, you can walk into a car showroom and buy a car using just one Bitcoin.”

While this scenario is not as common as this statement may suggest, buying a car with Bitcoin is possible at specialized sellers. The lawyer also showed that he misunderstood the pseudonymous nature of Bitcoin’s creator, Satoshi Nakamoto, claiming that he was from Japan:

“It was created by someone from Japan who used a fake name.”

Concerns over misuse

Kant also expressed concern over the misuse of cryptocurrencies. He said that “there is some system of rules that applies to this.”

Kant also said that “some Bitcoins are genuine, but some might not be.” However, it’s unclear whether he meant to suggest that counterfeit Bitcoin are in circulation (there are none) or that illegal activities taint some.

The latter appears likely since the statement was followed by the judge saying that “it has also become a possible way to do illegal business.”

India’s government has not yet introduced comprehensive legislation to govern cryptocurrencies, though it taxes gains and requires firms to report certain activities to financial regulators. The lack of regulation has drawn criticism from both the industry and policymakers amid the asset class’s continued growth.