Plea in Bombay HC seeks govt guidelines on cryptocurrencies

The PIL states that it is critical to address the cryptocurrency issue and frame appropriate regulation and legislation

A public interest litigation (PIL) has been filed in the Bombay high court (HC) seeking directions to the central government to enact appropriate laws to address the growing threat of cryptocurrencies and the malpractices of trading platforms in the country due to a lack of appropriate legislation and statutory authority.

While referring to a 2020 Supreme Court (SC) judgement, which set aside a circular of the Reserve Bank of India (RBI), that barred dealing in cryptocurrency as there were laws to regulate the same, the high court PIL states that the central government failed to frame laws. (Bloomberg)

The PIL states that it is critical to address this issue and frame appropriate regulation, legislation, and statutory enactment to address this growing problem; otherwise, a large financial scam on the scale of Karnataka’s recent bitcoin scam worth ₹10,000 crore could take place if left unchecked.

The PIL, filed in the HC by advocate Aditya Kadam, highlighted the problems being faced by investors whose rights are being violated and investments are at risk due to the absence of a grievance redressal mechanism for the unregulated cryptocurrency business in the country.

The application also pointed at the ease with which anyone can create a trading platform, cheat investors of their hard-earned savings and use the funds, thus gained fraudulently for committing frauds or even terror financing.

The PIL states that the petitioner was also a victim of such a fraud in 2018.

It adds that as the unregulated business is currently worth ₹6.6 billion, the quantum of loss by the frauds would have a direct impact on the revenue of the state as there are no tax protocols in place.

While referring to a 2020 Supreme Court judgment, which set aside a circular of the Reserve Bank of India (RBI) that barred dealing in cryptocurrencies as there were no laws to regulate the same, the PIL states that the central government failed to formulate laws.

The petitioner stated that he had made representations to several authorities and parties in the PIL on September 30, 2021, pointing out the problems of the cryptocurrency market but he had not received any response to the representations.

Stating that this “lackadaisical attitude” of the authorities prompted him to approach the HC, the PIL sought directions to the central government to protect the interests of citizens.

The PIL is expected to come up for a hearing on Tuesday.