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A recent Orissa High Court order in a criminal matter has ruled that cryptocurrency dealings are not illegal under Indian law.
The court observed that crypto currency is not money within the meaning of Price Chits and Money Circulation Schemes (Banning) Act 1978. It further said the investment made by the general public in crypto currency cannot partake the nature of deposit within the meaning of Odisha Protection of Interests of Depositors Act.
The court said there was no evidence to show that the petitioners had convinced members of the general public to invest money on promise of high returns. Or that any person was defrauded or his investment misappropriated by the petitioners.
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“It is clear that the petitioners were dealing with crypto currency which, as on date, is not illegal,” the order said. “The amounts invested are kept secure in a Trust Wallet of the investor without any scope of interference or manipulation by any other person.”
Centre’s stance
Earlier this year, the Centre had told the Supreme Court it is yet to take a decision on a mechanism to regulate cryptocurrencies and effectively investigate related offences.
A new taxation framework was introduced in the Finance Bill 2022 to provide for taxation and withholding of tax for virtual digital assets covering crypto currencies. Investors have to pay 30 per cent tax on income from select cryptocurrencies without deducting the loss incurred on other assets.
The present case
The matter involves two individuals that operated a ponzi scheme. Petitioners were alleged to have targeted individuals and encouraged them to invest in crypto currency STA Token by building a network of members. The investors were asked to recruit further investors on payment of interest or bonus which is expected to increase correspondingly to the number of members added by them. The Company, STA (Solar Techno Alliance), is a Netherland based company which launched STA Token over Block Chain in Binance Crypto exchange in 2022.
“The ruling by Orissa HC, which held that dealing in crypto currency is not illegal, is a significant one. While the dealing is not illegal, it would be interesting to see the implications of the same under different laws such as the Income-tax Act, 1961, which prescribes a defined mode of undertaking the transaction; or GST laws wherein the consideration towards supply of goods/services can be paid by a mode other than money too,” said Ashish Karundia, Founder, Ashish Karundia & Co.
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