From bail hearings to laundering cases, judges warn of a looming financial risk
New Delhi, 18 August 2025
India’s judiciary has once again sounded the alarm on the regulatory limbo surrounding cryptocurrencies, warning that the absence of a legal framework is exposing citizens, enforcement agencies, and the financial system to mounting risks.
The Supreme Court recently noted the government’s conflicting stance on digital assets: while cryptocurrencies like Bitcoin are taxed at 30%, no clear regulations exist to govern their trade. The Bench cautioned lawmakers that unchecked growth of the sector could trigger a “parallel economy” capable of destabilizing India’s financial order.
A History of Judicial Red Flags
The debate dates back to 2020, when the Internet and Mobile Association of India v. RBI case struck down the Reserve Bank of India’s blanket banking ban on crypto. The Court ruled the RBI had failed to present empirical data justifying its move, but simultaneously underscored the urgent need for legislative clarity. A ban, it stressed, may be disproportionate, but oversight was still essential.
In 2023, fresh observations emerged in the State of Odisha case, a bail matter where the Court acknowledged the surge in crypto-related disputes and noted that while trading in crypto assets is legal, the policy void is overwhelming India’s legal machinery. Judges grilled counsels not only on facts but on the absence of clear rules, warning that courts would be forced to improvise if lawmakers did not act.
Courts Step Beyond Individual Cases
From money laundering probes to tax evasion cases, the judiciary has moved beyond individual culpability to question systemic risks. In multiple hearings, judges have asked: “How long can a multi-billion-dollar ecosystem remain unregulated?”
Courts have even directed investigative agencies to share technical details of wallets and tracing tools, recognizing that traditional enforcement methods cannot keep pace with the complexities of crypto assets.
The message from the judiciary is unmistakable: crypto is no longer just a tech experiment but a fast-evolving financial structure intersecting with criminal law, taxation, consumer protection, and global finance. Continuing to rely on outdated legal tools, the Courts warn, will only deepen vulnerabilities.
Adding to the urgency, the Apex Court has described India’s current framework on crypto as “outdated”, urging Parliament to act swiftly and draft a modern regulatory regime.
The judiciary is not legislating, but it is demanding clarity. It is not dictating policy, but warning of consequences. As the Supreme Court signaled, every delay in regulation blurs the legal boundaries further—and the longer India waits, the costlier the fix will become.
The key question now is whether the government will continue relying on judicial patchwork and ad-hoc enforcement, or finally draw the lines for a sector that has already reshaped global finance.
