The Supreme Court on Monday compared Bitcoin trading in India to a more polished form of Hawala, an illegal money transfer system. The court also criticised the Centre for not setting clear rules for virtual currencies so far.
A bench of Justices Surya Kant and N Kotiswar Singh made these remarks while hearing a bail plea from Shailesh Babulal Bhatt, who was arrested by the police for allegedly being involved in illegal Bitcoin trading, reported PTI.
The judges noted that two years ago, in a similar case, the court had asked the government to explain its policy on virtual currencies. However, there has been no update from the government since then.
Senior lawyer Mukul Rohatgi, who represented Bhatt, argued that Bitcoin trading is not illegal in India, especially after the Supreme Court struck down an earlier RBI circular on the matter. He said his client was wrongly arrested.
In response, Justice Surya Kant said that while he personally doesn’t know much about Bitcoin, the court has been telling the government that a proper set of rules would help avoid such issues.
Justice Surya Kant said that, to his understanding, some Bitcoins are “genuine” while others are “fake”. He told Rohatgi that trading in Bitcoin in India is similar to a more sophisticated version of the Hawala system, especially since there are currently no regulations in place.
Rohatgi responded by saying that Bitcoin holds significant value, pointing out that in some foreign countries, one can even walk into a showroom and buy a car using a single Bitcoin. He mentioned that, as of Sunday, one Bitcoin was worth Rs 82 lakh, although he also admitted that he doesn’t fully understand how the trade works.
Additional Solicitor General Aishwarya Bhati, representing the Gujarat government and the Enforcement Directorate, told the SC that they want to file a detailed reply to the bail plea, as the case involves more than just Bitcoin trading.
The court gave the Gujarat government and the ED 10 days to respond and scheduled the next hearing for May 19.
Shailesh Babulal Bhatt, the accused, said he was arrested on August 14 last year and has been in jail since then. He is challenging the Gujarat High Court’s decision on February 25 to deny him bail.
(With inputs from PTI)