SC Puts The Onus Of Regulating Cryptocurrencies On Parliament

The Supreme Court has quashed a petition, which sought the apex court’s intervention directing the centre to formulate guidelines regulating trading of cryptocurrencies.

A bench comprising Chief Justice DY Chandrachud, Justice JB Pardiwala and Justice Manoj Misra disposed of the petition saying that the directives sought were ‘more in the nature of a legislative direction.’

The bench further observed that the plea pertained to Article 32 of the Constitution which did not fall under the Court’s jurisdiction. Article 32 relates to constitutional remedies and one of the provisions of the article empowers a citizen to move the Apex Court for enforcement of rights. 

One of the reliefs sought by the petitioner related to directions for the prosecution of cases involving digital assets or cryptocurrencies. On this, the Court noted that it was evident that the ‘real purpose is to seek bail in proceedings which are pending against the petitioner.’

“Though the petition is under Article 32 of the Constitution, it is evident that the real purpose is to seek bail in proceedings which are pending against the petitioner. We are unable to subscribe to this course of action…. We accordingly dispose of the Petition granting liberty to the petitioner to pursue his remedies in accordance with law,” added the bench. 

The SC also added that the petitioner is free to move the ‘appropriate court’ for the grant of regular bail, and refused to entertain the petition. 

The petition filed by Uttar Pradesh resident Manu Prashant Wig had invoked Article 32 while seeking directions to the union government for framing rules for the regulation of trading and mining of cryptos, besides prosecution of cases involving cryptos.

With this, the Court has more or less ruled that it is the prerogative of the legislature to make laws encompassing the space. The ruling is expected to give more heft to the centre’s position which more or less revolves around complete regulation of the ecosystem. 

While the union government has been a little measured in airing its views on regulating cryptocurrencies, the top brass of the Reserve Bank of India (RBI) has called for a complete ban on such virtual digital assets. Earlier this year, Prime Minister Narendra Modi pitched a global framework to regulate cryptocurrencies. 

On the other hand, RBI Governor Shaktikanta Das, in the past, has flagged the ‘dangers’ of cryptocurrencies and has even gone on to compare virtual assets with gambling. He also said that digital currencies could potentially undermine financial stability and could pave the way for the next financial crisis.

Das reiterated that there has been no change in RBI’s stance ever since. 

While a global consensus on crypto regulation was the centrepiece of India’s pitch during the G20 presidency, the centre has opted for a heavy taxation stance on cryptos to likely dissuade users from trading in crypto. 

In the past, the centre has introduced a 30% tax on gains from crypto transactions and a separate tax deducted at source (TDS) on crypto transactions of above INR 10,000. This has hit the user volume as excessive taxes have taken the sheen off the asset class. Adding fuel to the fire has been the collapse of giants such as FTX has further steered users away from cryptos.

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