A new method of hawala transactions has emerged, using USDT, a highly liquid stablecoin pegged to the US dollar. This system allows money to be moved across borders without traditional banking channels, raising concerns about tax evasion and illegal fund transfers.
How It Works
Hawala traditionally relies on trusted networks for money transfers. Now, the process has become more open, starting with social media posts advertising USDT-for-cash exchanges.
For example, a person in India looking to transfer money to Dubai buys USDT from a seller. They then travel to Dubai, where an associate of the seller buys back the USDT in exchange for dirhams. This bypasses regular banking channels, making it difficult to track the transaction.
Why USDT?
Market insiders say USDT is preferred because it is:
- Stable with minimal price fluctuations.
- Highly liquid, making it easy to use in crypto-friendly locations like Dubai.
- Not subject to banking restrictions when transferred outside exchanges.
Growing Concerns
Authorities are increasingly worried as USDT is also being used for illegal activities, including pump-and-dump stock scams, where fraudsters artificially inflate prices before selling at a profit.
With its growing role in hawala transactions, regulators may soon tighten controls on crypto-based money transfers to curb illegal financial activities.
