{"id":43037,"date":"2025-05-09T19:37:47","date_gmt":"2025-05-09T14:07:47","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=43037"},"modified":"2025-05-09T19:37:59","modified_gmt":"2025-05-09T14:07:59","slug":"supreme-court-flags-bitcoin-trading-as-way-for-hawala","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/09-05-2025\/supreme-court-flags-bitcoin-trading-as-way-for-hawala","title":{"rendered":"Supreme Court Flags Bitcoin Trading as a Way for Hawala"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Supreme Court expressed concern over the unregulated nature of Bitcoin trading in India, likening it to a \u201crefined way of Hawala business.\u201d<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is Bitcoin?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Bitcoin is a type of digital or virtual currency that uses cryptography for security, making it difficult to counterfeit or double-spend.\u00a0<\/li>\n\n\n\n<li>It operates on <strong>decentralized networks<\/strong> based on <strong>blockchain technology<\/strong>\u2014a distributed ledger enforced by a network of computers.\u00a0<\/li>\n\n\n\n<li>Cryptocurrencies are typically <strong>not controlled by any central authority,<\/strong> which makes them theoretically immune to government interference or manipulation.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td><strong>Blockchain technology<\/strong><br>&#8211; Blockchain technology is a <strong>decentralized, distributed ledger system<\/strong> that records transactions across many computers in a way that ensures security and transparency.<br>&#8211; Blockchain networks rely on <strong>consensus algorithms to validate transactions <\/strong>and maintain network integrity.\u00a0<br>1. These mechanisms ensure that <strong>only legitimate transactions are added<\/strong> to the chain.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concerns of Bitcoin<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Lack of Regulation: <\/strong>Despite repeated judicial nudges, the government has not issued a clear legal framework for virtual currency.<\/li>\n\n\n\n<li><strong>Potential for Misuse:<\/strong> Due to the absence of KYC\/AML enforcement and its cross-border nature, cryptocurrency can be misused for illicit activities, including a digital form of Hawala.<\/li>\n\n\n\n<li><strong>Threat to Financial Integrity: <\/strong>The unregulated market could jeopardize India&#8217;s efforts to curb black money and maintain capital controls.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Cryptocurrency Landscape<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>At present, India does not have any Law or provision which specifically deals with Cryptocurrency. India has not officially banned or allowed cryptocurrency trading.<\/li>\n\n\n\n<li><strong>Regulatory Uncertainty:<\/strong> In <strong>2018<\/strong>, the <strong>Central Board of Direct Taxes <\/strong>proposed a ban on cryptocurrencies, and the Reserve Bank of India (RBI) restricted banks from facilitating cryptocurrency transactions labeling it as a <strong>\u201cmacro-economic risk.\u201d<\/strong>\n<ul class=\"wp-block-list\">\n<li>This decision was overturned by the Supreme Court in <strong>2020.\u00a0<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Taxation Policies: <\/strong>The Indian government imposed a<strong> 30% tax <\/strong>on income from transfers of virtual digital assets in<strong> 2022, <\/strong>along with a <strong>1% tax deducted at source (TDS) <\/strong>on each transaction.\n<ul class=\"wp-block-list\">\n<li>These stringent measures have dampened domestic enthusiasm for cryptocurrency trading.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is Hawala?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Hawala is an informal method of transferring money without any physical movement of cash.\u00a0<\/li>\n\n\n\n<li>It works outside traditional banking channels and is often used for money laundering, terror financing, and tax evasion.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How Bitcoin can be in Hawala?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Anonymity:<\/strong> Traditional Hawala relies on trust and secrecy.\n<ul class=\"wp-block-list\">\n<li>Bitcoin allows pseudonymous transactions that are hard to trace, mimicking Hawala\u2019s secrecy.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Cross-Border Transfers:<\/strong> In traditional Hawala, money doesn&#8217;t physically cross borders; balances are settled informally.\n<ul class=\"wp-block-list\">\n<li>With Bitcoin, a person in one country can send Bitcoin to a counterpart in another country, who can convert it into local currency and deliver it to the intended recipient\u2014mirroring the Hawala model.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Quick Transfers: <\/strong>Unlike traditional remittances that take days and charge fees, Bitcoin transactions can be near-instantaneous and low-cost, making it attractive for illicit transfers.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img data-dominant-color=\"d5cfc3\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"724\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/05\/hawala-transaction-system-1024x724.png\" alt=\"hawala transaction system\" class=\"not-transparent wp-image-43038\" style=\"--dominant-color: #d5cfc3; width:526px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/05\/hawala-transaction-system-1024x724.png 1024w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/05\/hawala-transaction-system-300x212.png 300w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/05\/hawala-transaction-system-768x543.png 768w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/05\/hawala-transaction-system-1536x1086.png 1536w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/05\/hawala-transaction-system.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Comprehensive Legislation:<\/strong> India must enact a clear legal framework defining and regulating cryptocurrencies, exchanges, and wallets.<\/li>\n\n\n\n<li><strong>Strengthen Enforcement:<\/strong> Enhance capabilities of financial intelligence units to monitor crypto transactions.<\/li>\n\n\n\n<li><strong>International Cooperation: <\/strong>Work with FATF and G20 to establish global norms on crypto governance.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/news\/national\/trading-in-bitcoin-in-india-is-refined-way-of-doing-hawala-business-supreme-court\/article69543528.ece\" rel=\"nofollow noopener\" target=\"_blank\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">The Supreme Court expressed concern over the unregulated nature of Bitcoin trading in India, likening it to a \u201crefined way of Hawala business.\u201d<\/li>\n<p><\/p>\n<h3><strong>What is Bitcoin?<\/strong><\/h3>\n<li class=\"ms-5\">Bitcoin is a type of digital or virtual currency that uses cryptography for security, making it difficult to counterfeit or double-spend.\u00a0<\/li>\n<li class=\"ms-5\">It operates on decentralized networks based on blockchain technology\u2014a distributed ledger enforced by a network of computers.\u00a0<\/li>\n<li class=\"ms-5\">Cryptocurrencies are typically not controlled by any central authority, which makes them theoretically immune to government interference or manipulation.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/09-05-2025\/supreme-court-flags-bitcoin-trading-as-way-for-hawala\" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-43037","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/43037","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=43037"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/43037\/revisions"}],"predecessor-version":[{"id":43055,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/43037\/revisions\/43055"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=43037"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=43037"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=43037"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}