The Delhi High Court has delivered a significant judgment clarifying the legal status of cryptocurrency exchanges in India. In a landmark ruling, the Court held that the taxation of Virtual Digital Assets (VDAs) under the Finance Act, 2022 does not transform private cryptocurrency exchanges into “State” authorities under Article 12 of the Constitution of India. Consequently, such exchanges cannot be subjected to public law scrutiny merely because they operate within a statutory tax and regulatory framework.
The judgment came in the case of Amit Ranjan & Ors. v. Union of India and Others (LPA 393/2026), where a Division Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia dismissed an appeal filed by users of the cryptocurrency exchange platform BitBNS.
Background of the Dispute
The appeal arose from allegations made by users of the cryptocurrency exchange BitBNS, who claimed that the platform had imposed restrictions on withdrawals, causing financial hardship to investors. Dissatisfied with the response of the authorities, the appellants sought directions from the Delhi High Court for the constitution of a Special Investigation Team (SIT) or an investigation by the Central Bureau of Investigation (CBI) into the alleged irregularities.
The appellants argued that the cryptocurrency industry has now acquired statutory recognition through the Finance Act, 2022, which introduced a comprehensive tax regime for Virtual Digital Assets. According to them, the imposition of income tax on crypto transactions, the deduction of tax at source (TDS) under Section 194S of the Income-tax Act, and the applicability of anti-money laundering obligations demonstrated that cryptocurrency exchanges function within a regulated financial ecosystem.
Based on this regulatory framework, the petitioners contended that cryptocurrency exchanges should be treated as entities performing public functions and, therefore, be subjected to judicial review under public law principles. They further alleged that the absence of adequate regulatory intervention violated their fundamental rights guaranteed under Articles 14 and 21 of the Constitution.
Delhi High Court’s Findings
The Delhi High Court firmly rejected these arguments and clarified that taxation and regulatory compliance alone do not alter the legal character of a private entity.
The Court observed that the respondent cryptocurrency exchanges are privately owned businesses. They were neither established by the Government nor financed or controlled by any State authority. Therefore, they cannot be categorized as “State” or an instrumentality of the State within the meaning of Article 12 of the Constitution.
The Bench categorically held that the introduction of taxation provisions for Virtual Digital Assets under the Finance Act, 2022 does not convert cryptocurrency exchanges into public authorities. Similarly, compliance with statutory obligations such as TDS deductions and anti-money laundering regulations merely reflects legislative oversight and does not create a public law relationship between the exchanges and their customers.
According to the Court, statutory regulation of an industry is fundamentally different from governmental ownership or control. Merely because Parliament has chosen to tax a particular asset class or regulate certain aspects of its operation does not mean that private businesses engaged in that sector become constitutional authorities.
No Public Law Remedy in a Private Commercial Dispute
Another important aspect of the judgment relates to the nature of the dispute itself.
The Court noted that the grievances raised by the investors essentially arose out of contractual and commercial relationships between private parties. Such disputes ordinarily fall within the domain of private law and cannot automatically be converted into constitutional litigation.
The Bench further observed that even though a large number of investors may have been affected by the alleged withdrawal restrictions, the scale of the dispute alone cannot transform a private commercial disagreement into a matter involving enforceable public law rights.
Therefore, the Court found no justification for invoking its extraordinary writ jurisdiction or directing a CBI or SIT investigation.
Request for CBI or SIT Investigation Rejected
The appellants had requested the Court to order an independent investigation into the functioning of BitBNS through either the Central Bureau of Investigation or a Special Investigation Team.
However, the High Court held that such directions can only be issued in exceptional circumstances involving significant public interest or violation of constitutional or statutory obligations by public authorities.
Since the dispute primarily concerned allegations against private entities operating under private contractual arrangements, the Court concluded that no extraordinary circumstances existed warranting a court-monitored investigation.
Accordingly, the appeal was dismissed.
Significance of the Judgment
This decision is an important precedent for India’s evolving cryptocurrency regulatory framework. While the Finance Act, 2022 introduced taxation provisions for Virtual Digital Assets and imposed TDS obligations on crypto transactions, the Delhi High Court has clarified that these fiscal measures do not amount to statutory recognition of cryptocurrency exchanges as governmental or public authorities.
The ruling reinforces the distinction between regulatory oversight and constitutional status. A private company does not become a “State” merely because it is subject to taxation, financial regulations, or anti-money laundering compliance requirements.
The judgment also reiterates that disputes arising from transactions on cryptocurrency platforms generally remain matters of private law unless specific statutory provisions or governmental involvement create enforceable public law obligations.
Conclusion
The Delhi High Court’s ruling provides much-needed clarity regarding the constitutional position of cryptocurrency exchanges operating in India. By holding that taxation of Virtual Digital Assets under the Finance Act, 2022 does not convert private exchanges into “State” entities under Article 12, the Court has reaffirmed settled constitutional principles governing public law remedies.
The decision also underscores that while the cryptocurrency sector may be regulated for taxation and compliance purposes, such regulation does not automatically expose private exchanges to constitutional writ jurisdiction. Investors seeking remedies against cryptocurrency exchanges will generally be required to pursue appropriate contractual, civil, or statutory remedies rather than invoking public law jurisdiction solely on the basis of the taxation framework.
Case Title: Amit Ranjan & Ors. v. Union of India and Others
Case Number: LPA 393/2026