{"id":1153,"date":"2025-06-29T19:05:13","date_gmt":"2025-06-29T13:35:13","guid":{"rendered":"https:\/\/tarungaur.in\/mediacenter\/?p=1153"},"modified":"2026-02-07T17:37:23","modified_gmt":"2026-02-07T12:07:23","slug":"cryptocurrency-law-india-confusion","status":"publish","type":"post","link":"https:\/\/tarungaur.in\/mediacenter\/cryptocurrency-law-india-confusion\/","title":{"rendered":"India\u2019s Crypto Crisis: When Legal Vacuum Fuels Legal Extortion"},"content":{"rendered":"

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By Advocate Tarun Gaur | White-Collar Crime Lawyer | Delhi High Court & Dwarka Court | All India Rank 1 \u2013 National Law University, Delhi<\/strong><\/p>\n

The Supreme Court of India, in a pivotal hearing on SLP(Crl) No. 4036\/2025 \u2013 Shailesh Babulal Bhatt vs. State of Gujarat<\/em>, recently made a candid and critical observation:<\/p>\n

\u201cThere exists a grey area in the field of bitcoin\/cryptocurrency regulation and the existing laws are completely obsolete.\u201d<\/p><\/blockquote>\n

As a practicing advocate in the Delhi High Court and Dwarka Courts, specialising in white-collar crime and cyber-financial fraud, I could not agree more. I represent some of the most credible names in India\u2019s cryptocurrency exchange ecosystem, and I see the devastating consequences of this legal vacuum every day. Entrepreneurs with legitimate crypto businesses are being harassed, arrested, and extorted \u2014 not because they broke the law, but because the law does not exist.<\/p>\n

Crypto Currency Laws in India: The Glaring Void<\/h3>\n

The current legal framework, or rather the lack thereof, leaves law enforcement agencies fumbling in the dark. In the absence of a dedicated law on cryptocurrency, authorities often invoke outdated provisions from the Indian Penal Code (IPC), Prevention of Money Laundering Act (PMLA), or the Information Technology Act. This approach not only hampers due process but also enables the misuse of the legal system by opportunists masquerading as victims.<\/p>\n

Even in the Bhatt case, the Hon\u2019ble Supreme Court shifted focus from the accused\u2019s conduct to the broader issue \u2014 the regulatory absence around cryptocurrency. The justices noted that various jurisdictions treat crypto differently, and India\u2019s inertia is becoming indefensible.<\/p>\n

From Victim to Accused: The Tragic Inversion<\/h3>\n

In many cases I\u2019ve handled, clients with transparent blockchain records, KYC-compliant wallets, and legitimate business operations were dragged into criminal proceedings \u201cjust to be safe.\u201d Meanwhile, the real perpetrators \u2014 those exploiting crypto\u2019s grey status to file false FIRs and demand unlawful settlements \u2014 remain untouched.<\/p>\n

This inversion of justice is alarming. When extortionists pose as complainants and genuine crypto exchanges are vilified, the legal system becomes a tool of oppression, not protection.<\/p>\n

Cryptocurrency Fraud, ED Investigations & The Cry for Bail<\/h3>\n

The lack of clarity also empowers arbitrary action by enforcement agencies like the ED. Whether it\u2019s an ECIR under the PMLA or a routine cybercrime FIR, the absence of a defined legal threshold means bail in cryptocurrency fraud cases becomes unduly difficult, even when no predicate offence is made out. This legal ambiguity severely affects not only the accused\u2019s liberty but also investor sentiment and business continuity.<\/p>\n

A Paradox: Taxing Crypto at 40% Without Regulating It<\/h3>\n

It\u2019s not that the government is unaware of the role cryptocurrencies play in modern commerce. In fact, the imposition of a 30% capital gains tax, along with 1% TDS and GST overlays \u2014 cumulatively pushing tax burdens well over 40% \u2014 is proof that the State wants to profit from this emerging economy. But what it refuses to offer in return is legal clarity and protection.<\/p>\n

This selective recognition \u2014 taxation without regulation \u2014 is not only unjust but economically shortsighted. The absence of a regulatory framework enables misuse while stifling legitimate crypto innovation and compliance.<\/p>\n

India Can\u2019t Afford to Lose the Crypto Revolution<\/h3>\n

India has the potential to be a global blockchain hub. Our developers, investors, and entrepreneurs are among the best in the world. But if we continue to criminalise innovation, we risk losing this talent to countries with progressive crypto laws. Regulation must not be feared \u2014 it must be embraced to protect investors, promote transparency, and boost economic growth.<\/p>\n

The Way Forward: Law, Not Litigation<\/h3>\n

It is high time the Parliament recognises that crypto regulation is a legislative necessity. The judiciary can only go so far. The government must introduce a clear, comprehensive, and enforceable law on crypto currencies, crypto mining, and digital asset exchanges. Only then can enforcement agencies act with accountability, and only then will honest business owners be free from undue persecution.<\/p>\n

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About the Author<\/h3>\n

Advocate Tarun Gaur<\/strong> is one of India\u2019s leading white-collar crime lawyers with special expertise in cryptocurrency law. Practicing at the Delhi High Court and Dwarka Court, he represents several crypto exchanges and blockchain startups across India. He is also among the very few cryptocurrency lawyers in India today and is an All India Rank 1 holder<\/strong> from India\u2019s premier National Law School.<\/p>\n

If you’re looking for expert legal advice on cryptocurrency fraud, ED investigations, bail in crypto cases, money laundering under PMLA, or crypto compliance<\/strong>, connect with Advocate Tarun Gaur today.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n

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