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India’s Supreme Court has raised concerns about the lack of a comprehensive regulatory framework for cryptocurrencies in India, despite the government imposing taxes on digital assets. Justice Surya Kant highlighted the existence of a “parallel economy” fueled by unregulated crypto transactions, posing a significant risk to the national economy. The court emphasized the inconsistency of taxing cryptocurrency gains at 30% without implementing corresponding regulations. The court’s observations underscore the need for a clearer regulatory approach.
The Additional Solicitor General of India responded to the court’s concerns by indicating that the government would “take instructions,” suggesting a potential review of the current regulatory stance. This follows a previous hearing where Justice Kant and lawyer Mahesh Jethmalani discussed the increasing global adoption of Bitcoin, with Jethmalani citing examples of Bitcoin usage in international transactions, albeit with some inaccuracies regarding Bitcoin’s origins.
Justice Kant also voiced concerns about the potential misuse of cryptocurrencies for illegal activities, noting the possibility of both legitimate and illegitimate Bitcoin transactions. While the exact nature of this concern remains unclear, it emphasizes the need for regulatory measures to prevent the exploitation of the crypto space for illicit purposes.
Currently, India’s government taxes cryptocurrency gains and mandates reporting of certain activities to financial regulators, but a comprehensive legislative framework remains absent. This lack of regulation has drawn criticism from both the industry and policymakers, particularly given the continued growth of the cryptocurrency market. The Supreme Court’s intervention underscores the urgent need for India to address this regulatory gap to mitigate economic risks and prevent the misuse of cryptocurrencies. The government’s response suggests a potential shift towards establishing a more defined regulatory environment for crypto assets in India.
