India, the nation with the highest crypto adoption has also become the hotspot for surging illegal activities related to cryptocurrencies.
As per the recent report in the Economic Times, the Income tax department of the national has identified and dismantled a multi-faceted hawala scam involving the usage of cryptocurrencies.
The illicit activity came into the spotlight following the raid on a couple of wedding planners based in Jaipur. In the raid, the authority seized digital assets of over $1.8 million and jewelry and cash from 20 different wedding planners.
The authorities also seized a few crypto wallets linked to the accused racket, from which some of them are on national crypto exchanges and a few on offshore exchanges.
Additionally, investigations revealed that customers used hawala operators in the states of Gujarat and Rajasthan to swap cryptocurrencies like Bitcoin and Tether for cash payments that were not disclosed.
A further effort will be undertaken to identify all individuals suspected of receiving cash that was not properly disclosed, and records of these actions, including spreadsheets, emails, and Whatsapp discussions, have been collected.
With close linkages to other important metropolises like Delhi, Mumbai, and Hyderabad, officials think the Jaipur disclosures may only be the beginning.
No one may receive more than Rs 2 lakh in cash in a single transaction or from a single person in a single payment, according to official income tax regulations.
Why are Crypto illicit activities surging in India?
As per experts, some primary reasons behind the surge of illicit activity concerning cryptocurrencies in India are the unclear set of rules for the digital assets Industry, and high taxes over income from crypto.
Indians who are new to cryptocurrency investment have a lack of knowledge and awareness, which leaves them open to fraud and fraud.
The problem is made worse by cryptocurrencies’ anonymity and decentralized structure, and scammers and fraudsters may take advantage of the increasing acceptance and use of digital assets.
Illicit activities flourish in the absence of efficient regulation and enforcement systems, underscoring the necessity of greater awareness, education, and efficient regulation to address these problems.
The Indian government and regulatory agencies must act more proactively to counter the rise in illegal cryptocurrency activity.
This entails creating precise rules and regulations for Bitcoin transactions in addition to raising public knowledge and educating people about the advantages and disadvantages of digital assets.
Law enforcement organizations must also have the tools and know-how needed to properly investigate and prosecute crimes using cryptocurrencies.
How big is the India Crypto Market?
India has surpassed the UK, Turkey, and Russia to become the world’s second-largest cryptocurrency market in terms of raw transaction volume.
According to Chainalysis, India now has greater cryptocurrency taxes than most other nations, with a 1% tax on all transactions and a 30% gain cut. It suggested that domestic exchanges may find it more difficult to compete as a result of the transaction tax’s unequal implementation.
According to newly released research, India, the country with the highest adoption of cryptocurrencies, has lost more than $1 billion in taxes from the industry as a result of lax regulations and tax laws.
Due to the complicated regulations and exorbitant taxes, traders from India have turned to offshore exchanges situated in wealthy countries.
According to the Esya Center’s analysis, since July 2022, cryptocurrency traders have relocated to international exchanges because of the lack of clarity surrounding taxes and regulations in the country, costing the Indian government an estimated 6,000 crore Indian rupees in taxes.
