Bitcoin (Cryptocurrency) Trading in India is similar to a sophisticated version of the Hawala system: Supreme Court (SC) | Current Affairs | Vision IAS
News Today Logo

Bitcoin (Cryptocurrency) Trading in India is similar to a sophisticated version of the Hawala system: Supreme Court (SC)

Posted 07 May 2025

2 min read

Remarks were made on a bail application where SC noted the absence of a clear regime on regulating virtual currency. 

About Cryptocurrency and Hawala

  • Cryptocurrency: Form of digital currency (based on the blockchain technology) that utilizes a unique software code. E.g., Bitcoin, Ethereum, etc.
    • Blockchain is an open-source database (public ledger) distributed across a decentralized computer network/internet that forms a permanent record of transactions between parties. 
    • Key Features: Non fiat (functions independently of government/Central Bank); No intrinsic Value, etc. 
  • Hawala: Informal channel for transferring funds from one location to another through service providers (hawaladars) regardless of the transaction nature.
    • Key Features: Based on trust between parties, it  does not involve cash movements as hawaladars settle debts among themselves.
  • Nexus between Hawala and Cryptocurrency: In Blockchain, nodes can be seen as hawaladar that maintain the network  through mutual trust/consensus.

Reasons for Rising Nexus between them

  • Outside the Traditional Banking System: Both are unregulated and unreported transaction vulnerable for illicit activities. 
  • Cheaper: Both are not subjected to prohibitive commis­sions and currency exchange fees. 
  • Lack of Transparency: In Cryptocurrencies, transactions are recorded in public ledger anonymously, while in hawala it is done in cash without any paper trail
  • Unique passcodes/Encryption key: While Cryptocurrency uses an encryption key, hawaladars use the passcodes shared between them. 
  • Tags :
  • Cryptocurrency
  • Hawala
  • Bitcoin-Hawala
Watch News Today
Subscribe for Premium Features