Supreme Court Rejects Plea Seeking Cryptocurrency Regulation

The Supreme Court has rejected a plea seeking guidelines to regulate cryptocurrency mining and trading, saying that the solution for the plea requires legislative direction.

A bench headed by Chief Justice D.Y. Chandrachud said that although the petition was filed under Article 32 of the Constitution, it was obvious that the “real purpose is to seek bail in proceedings which are pending against the petitioner.”

The bench also comprised Justices J.B. Pardiwala and Manoj Misra.

In India, buying and selling cryptocurrency is taxed at a rate of 30% (plus 4% cess) as per section 115BBH. As the heavy tax took a toll on their business, many cryptocurrency exchanges decided to leave India.

Founders of such organizations are now residing either in Dubai or Singapore, which are becoming crypto hubs as Indian exchanges move to these locations. Cryptocurrency exchanges in India fear that enacting a strict law could put them in lingering legal disputes.

The Reserve Bank of India (RBI) is highly critical of cryptocurrencies, saying that they lack inherent value unlike banknotes. Moreover, cryptocurrencies can be misused by terrorist organizations and anti-national groups because they lack a centralized regulatory system. Cryptocurrencies are virtual currencies and their ownership is stored on decentralized blockchains, which are distributed ledgers.

However, the Indian government has not taken a hostile stance towards cryptocurrencies, saying that the government cannot be averse to innovative technologies. In a move to counter decentralized cryptocurrencies, the RBI has launched its digital rupee, which is currently under pilot mode.

Unlike cryptocurrencies, Central Bank Digital Currency (CBDC) has inherent value because it is backed by banknotes, despite being a virtual currency.