India’s top court told the government that it should prepare clear rules for digital currencies, or the lack of oversight might jeopardize the sector. During the May 19, 2025 proceedings, Surya Kant and N. Kotiswar Singh claimed that it is more important to regulate cryptocurrency than banning it outright.
When looking into businessman Shailesh Babulal Bhatt’s request for bail, the court noted the lack of clear rules for virtual assets. The panel of justices stated that outlawing crypto entirely would refuse to acknowledge a rising financial sector.
They noted that despite the lack of a legal framework, the government imposes a 30% tax and a 1% TDS on crypto transactions. This move, they said, implies official recognition of crypto as a taxable asset. Hence, the court questioned the contradiction between taxation and the lack of regulation.
He argued that even courts cannot adequately consider complex digital asset cases without getting support from technical experts. He drew attention to the challenging task of ensuring the presence of crypto assets in court due to the complexities of crypto evidence handling.
Regulatory Gaps Highlighted Amid Ongoing Crypto Fraud Investigation
The justices mentioned that in Shailesh Bhatt’s case, the accused kidnapped BitConnect staff in 2018 and got a large amount of Bitcoin, Litecoin, and cash in return. The Central Bureau of Investigation has been directed to complete its investigation and submit a new report by May 30, 2025.
Ms. Bhati told the court she would seek advice from the central government regarding the case. Still, the bench said that the world is running out of time to act since cryptocurrencies are spreading without sufficient protections.
It was stressed in court that unregulated crypto trading may be like the hawala system, which has long facilitated the illegal movement of money worldwide. It pointed out that anonymous cryptocurrency transfers on the Internet can lead to scams, illegal money transfers, and capital loss to other countries.
The judge noted that crypto policy must be handled differently, but there are not enough rules now for courts to judge fraud cases. He said there is still no clarity about Bhatt, whether he played a victim or suspect role in what happened.
In addition, the court noted that not considering digital assets in India’s financial system is no longer acceptable. It pointed out that rapid steps should be taken by the government, such as monitoring, inviting experts, and ensuring legal protection for both consumers and the financial sector.
Conclusion
It is now clear from India’s top court that cryptocurrency cannot exist outside the law. Calling on the government to establish better oversight, the judiciary is signaling that accountability in digital finance is becoming important. Many experts believe the government should soon enact regulations reflecting how extensive and complicated crypto activities are.
