CRYPTO CURRENCY AND RELATED TOPICS
Summary:
Sub-Chapter 1: Evolution of Blockchain Technology
- Blockchain = decentralized distributed ledger.
- Trust embedded in cryptography, not institutions.
- Blocks linked via hashing → immutability.
- Consensus mechanisms: PoW, PoS.
- Applications beyond crypto: land records, supply chains, digital identity.
- Governance paradox: transparency vs reduced regulatory control.
- Key theme: Digital trust architecture & algorithmic governance.
Sub-Chapter 2: Cryptocurrency – Concept & Typologies
- Digital asset secured by cryptography.
- Origin: Bitcoin (2009, post-2008 crisis).
- Types:
- Payment tokens (Bitcoin)
- Utility tokens
- Security tokens
- Stablecoins
- Privacy coins
- NFTs
- Features: decentralization, volatility, limited supply.
- Governance concern: monetary sovereignty & AML.
Sub-Chapter 3: Bitcoin Architecture & Mining
- Proof of Work validation.
- Mining = solving cryptographic puzzles.
- Block reward + halving every 4 years.
- 21 million cap → deflationary model.
- Energy-intensive → environmental debate.
- Governance issue: traceability vs anonymity.
Sub-Chapter 4: Wallets & Exchanges
- Wallets store private keys (not coins).
- Hot vs Cold wallets.
- Exchanges:
- Centralized (KYC compliant)
- Decentralized (harder to regulate)
- Rise of DeFi.
- Exchanges = regulatory choke points.
- Cybersecurity & consumer protection risks.
Sub-Chapter 5: Crypto & Dark Web
- Used in darknet marketplaces (e.g., Silk Road).
- Facilitates drug trade, ransomware, illegal sales.
- Privacy coins harder to trace.
- Blockchain not fully anonymous—traceable with tools.
- Policy dilemma: innovation vs criminal misuse.
Sub-Chapter 6: Crypto & Money Laundering
- Facilitates layering stage of laundering.
- Tools used:
- Mixers/tumblers
- ICO fraud
- Peer-to-peer transfers
- AML challenges in decentralized platforms.
- Need for blockchain analytics & FATF standards.
Sub-Chapter 7: Tax Evasion via Crypto
- Under-reporting of capital gains.
- Crypto-to-crypto swaps complicate tax.
- Offshore wallets.
- Smurfing techniques.
- India’s response: 30% tax + 1% TDS.
- Core issue: fiscal equity & compliance.
Sub-Chapter 8: Global Regulatory Models
- USA: Property classification (IRS).
- EU: AMLD + MiCA framework.
- UK: FCA regulation.
- Japan: Licensing model.
- Singapore: Balanced regulation.
- China: Near-complete ban.
- Global trend: Regulation, not prohibition.
Sub-Chapter 9: International Cooperation
- FATF “Travel Rule”.
- J5 Tax Enforcement Group.
- Interpol, Europol coordination.
- MLAT-based asset seizure.
- Challenge: jurisdictional differences.
Sub-Chapter 10: Blockchain Forensics
- Public ledger allows transaction tracing.
- Tools: Chainalysis, Elliptic.
- Address clustering.
- AI-based anomaly detection.
- Seizure & enforcement actions.
- Privacy coins remain challenge.
Sub-Chapter 11: Legal Status in India
- Not legal tender.
- RBI 2018 banking restriction.
- Supreme Court (2020) struck down RBI ban (proportionality doctrine).
- Currently regulated via taxation.
- No comprehensive crypto law yet.
Sub-Chapter 12: RBI Circular & Constitution
- RBI power vs Article 19(1)(g).
- Supreme Court applied prop