India Supreme Court denies petition for digital currency regulation

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The Indian Supreme Court has opted against entertaining a petition urging the central court to frame digital currency guidelines for the mining and trading of assets, citing the legislative direction of the filing.

The court’s ruling follows a Public Interest Litigation (PIL) filed by Manu Prashant Wig under Article 32 of the Indian Constitution. However, the bench chaired by Chief Justice D.Y. Chandrachud argued against the PIL, stating that the claims were intended to secure bail for the petitioner, striking out the petition.

“We are unable to subscribe to this course of action. The petitioner would be at liberty to move the appropriate court for the grant of regular bail,” read the Supreme Court’s order.

In its ruling, the Indian Supreme Court advised the petitioner to seek bail via the appropriate routes. The court also poked holes in the reliefs seeking a legal framework for digital currencies for failing to satisfy the requirements of Article 32 dealing with the right to constitutional remedies.

“Insofar as the main reliefs are concerned, they are more in the nature of a legislative direction which the court cannot issue under Article 32 of the Constitution,” read the order. “We accordingly dispose of the petition granting liberty to the petitioner to pursue his remedies in accordance with law.”

The petitioner, currently in custody by Delhi Police, is the subject of a high-profile investigation over allegations of digital currency fraud. According to a filing by Delhi Police’s Economic Offence Wing (EOW), the petitioner allegedly lured over 133 investors to invest in digital assets with the promise of double-digit returns within weeks.

Wig had previously served as a director at Blue Fox Motion Picture Limited, using the firm to legitimize his operations in the eyes of investors. With options running thin for Wig, he turned to the constitutional PIL to argue for his release.

Despite striking out the call for a legal framework for digital currencies, the Indian Supreme Court has a positive stance toward the asset class. In 2020, the central court repealed the Reserve Bank of India (RBI) decision, banning banks and other financial institutions from facilitating digital currency transactions from exchanges and traders in a historic judgment that sent ripples through the local ecosystem.

India’s approach toward digital currency regulation

For all its harsh stance toward the digital currency ecosystem, India does not have a comprehensive legal framework to regulate the activities of service providers. Rather than roll out robust rules, experts say the country is taking the easy route by imposing heavy taxes on industry players, designed to stifle the industry’s growth.

Plans for a local rulebook were abandoned in favor of a global legal framework in 2022, given India’s role as G20 president. The proposed framework is scheduled for the middle of 2024, receiving inputs from both the Financial Stability Board (FSB) and the International Monetary Fund (IMF).

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