Let’s say you got the black money of about 10 Crore.
Now he starts to buy BTC. The only way he can buy BTC with black money is through LocalBitcoins.com as that is the only place where you can visit the person and pay him directly.
Well, some sellers require ID verification, so that can be a problem.
Let’s say somehow you made all your Black Money into 10 Crore in BTC
Now you need to convert and send it to Bank, isn’t it? You can only do that through some of the Indian Exchangers. And they will ask you for your PAN card for sure.
If someone says, what if they get 1000s of users and PAN card, then they don’t need BTC, they can simply do that with the bank account as well. So, it’s not the BTC which is to be blamed, rather the corrupt people.
Similar to holding Black Money does not make Rupee illegal, BTC is not illegal as well. It’s just the fear of unknown that is right now in the air, which I hope will be soon rectified.
So, in one way (buying) or the other (selling), if the government wants to, they can track the Black Money.