India’s Supreme Court Demands Crypto Clarity Amid Legal and Economic Concerns

India’s Supreme Court has called out the central government for failing to provide clear regulation for cryptocurrencies. In a hearing on May 20, the bench warned that the regulatory vacuum is becoming a serious threat to the country’s financial stability.

Court Questions Inaction

The court said unregulated crypto activity is starting to resemble hawala operations—a term for underground money transfers that bypass legal banking systems. Justices pointed out the contradiction of taxing crypto transactions at 30% while offering no formal regulatory structure to guide them.

“If you can tax it, then you must regulate it,” said Justice Suryakant during the session.

The judges also criticized the slow pace of enforcement. Cases like the ₹2,000 crore WazirX hack have stalled or been dismissed, with victims referred to various agencies like the RBI and SEBI, none of which have taken clear responsibility.

Cracks in Oversight

Without proper laws in place, criminal investigations are falling apart. The court referenced the ongoing case against Shailesh Babulal Bhatt, accused of extorting millions in crypto and fiat. His case highlights just how difficult it is to prosecute digital asset crimes under the current legal structure.

The government’s representative in court acknowledged the concerns and said a review may follow, but no timeline has been set.

Capital Shifts to Real Estate

In the absence of clear rules, India’s wealthiest are pulling out of crypto and moving funds into real estate. High-net-worth individuals are reportedly buying land, commercial spaces, and luxury properties both in India and abroad.

This shift, according to market advisors, is driven by a need for legal clarity and asset protection. Unlike crypto, real estate offers more predictable returns and is shielded by stronger legal frameworks.

Fintech at Risk

The court’s remarks also raise questions about India’s position in the global fintech race. While countries like the UAE and Singapore have embraced digital asset regulation, India remains caught between taxation and legal ambiguity.

This uncertainty may drive developers, investors, and startups abroad. It risks turning India into a less attractive destination for blockchain innovation and financial technology.

A Call to Act

With investor confidence wavering and enforcement breaking down, the Supreme Court’s warning puts pressure on the Finance Ministry to act. Lawmakers must now decide whether to define a path for crypto regulation—or risk watching the sector unravel from within.