‘If You Can Tax It… Also Please Regulate It’: India’s Supreme Court Calls Crypto a “Polished Hawala” and Demands Urgent Rules

Supreme Court Questions Delay In Crypto Rules While Bitcoin Taxation Continues

India’s Supreme Court has raised concerns over the central government’s continued inaction on forming a clear regulatory framework for cryptocurrencies, even as profits from digital assets are taxed at a steep 30%.

In a recent hearing, the court warned that unregulated Bitcoin trading resembles a modern form of the illegal “hawala” system, used to move money without oversight.

A two-judge bench comprising Justices Surya Kant and N Kotiswar Singh pressed the government for answers, saying,

“Why does Centre not come out with a clear-cut policy on regulating cryptocurrency? There is a parallel under-market for it and it can affect the economy.”

‘If You Can Tax It… Also Please Regulate It’ Says Court

Justice Surya Kant pointed to the government’s own treatment of cryptocurrencies under tax law, stating,

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

The comment highlights the inconsistency in India’s crypto policy—while gains from digital currencies are taxed, no formal law defines their legal status or provides protection for users.

The court also warned against banning cryptocurrencies altogether, calling such a move impractical.

The bench asked,

“Nobody is saying to stop it, because wouldn’t not be wise for the economy. Banning may be shutting your eyes from ground reality. But what about regulating it?”

Crypto Fraud Cases Reveal Enforcement Gaps

The debate arose during a case involving allegations of Bitcoin fraud.

One such case involves Shailesh Babulal Bhatt, who is accused of extorting large sums in cryptocurrencies and cash.

The court took note of how such crimes are growing in the absence of clear regulations.

In a separate instance, victims of the ₹2,000 crore WazirX hack were dismissed without recourse, told instead to approach agencies like the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), or Central Bureau of Investigation (CBI)—bodies that have not taken clear responsibility for crypto oversight.

Years Of Silence Despite Earlier Court Push

The Supreme Court noted this isn’t the first time it has asked the government to take a position.

Back in February 2022, it requested clarification on whether cryptocurrency trading was legal in India and sought a roadmap for regulation.

More than two years later, that clarity is still missing.

The Centre told the court in January 2024 that a decision was still pending.

During the latest hearing, the court reiterated that expert consultation is needed, but urged that steps must be taken without further delay.

The judge said,

“We aren’t experts. Experts would examine it, but some steps to regulate it and have an eye on it.”

India’s Wealthy Exit Crypto Amid Policy Confusion

With no regulatory protection and rising fraud risks, many of India’s wealthiest investors are pulling out of crypto and shifting their capital into real estate.

Luxury property consultant Aishwaraya Shri Kapoor noted that ultra-high-net-worth individuals—India’s top 0.001%—are building portfolios ranging from ₹75 crore to ₹500 crore in land, branded residences, trophy penthouses, and heritage properties.

According to Kapoor, this shift isn’t just about returns—it’s also about protecting capital, ensuring liquidity, and accessing exclusive resale opportunities that real estate offers, which crypto cannot guarantee in India’s current policy vacuum.