India Sees 'Dabba Trading' Trend Emergence to Bypass Current Crypto Ban

India’s Dabba Trading Emerging in Crypto Coins Dealings

The Reserve Bank of India sentiments towards crypto coins has recently sparked a new trend of trading cryptocurrencies in India. Coin holders within the jurisdiction are resulting to ‘dabba trading’ as an alternative to evade a banking freeze enacted towards crypto markets by the RBI in April 2018. This old method of trading stocks illegally is finding its way back into India’s financial markets through digital coins.

India’s Reserve bank has been keen on regulating crypto coins to protect its consumers. However, this seems not to be working sufficiently especially with most coin enthusiast seeking alternative means to avoid the regulator.

Dabba Trading in Crypto Coins

Market information suggests that this type of trading involves dealing outside the pre-arrangements postulated by order books. Therefore, participants end up engaging in illegal trade setups that are relatively different from Over the counter trades in financial markets.

This type of trading arrangement has been popular for a couple of decades within India’s stock market. Surprisingly, the same pattern seems to be replicating itself with the rise in digital coins in a bid to evade curtailments set by RBI. India’s cryptocurrency markets falls among the most vibrant right now which prompted the need for quick alternative means to trade altcoins.

Dabba operations within a trading framework are relatively similar to hawala, an infrastructure used for transportation of stolen goods or cash all over the globe. What the traders do is execute dealings using foreign entities like Dubai or European based banks. Therefore, it becomes hard for the participants to be tracked by the RBI for exchanging crypto coins.

As it stands, India hosts a couple Dabba brokers in its prominent cities like Kolkata, Mumbai and Surat which have been prevailing well despite the skeptical mood looming its crypto market.

The ‘Dabba Trading’ Cycle

This market cycle is completed by the supply and demand created by brokers and investors within India’s crypto markets. An investor can for instance purchase a certain amount of altcoins in cash from a broker who in turn buys BTC or other coins via an overseas account. In the event where an investor wants to cash out, the broker will then liquidate the overseas account and settle the difference in cash leaving the investor untouched by RBI.

The brokers transfer the funds via the illegal hawala channel although not in all cases. A few of the market brokers are diligent enough to use international money transfer platforms which are less risky for both parties. Normally, investors can take between 24 hours and a week for their cash payments to be processed.

In the case where a broker hits the $250,000 remittance limit set by India’s regulator they can opt for alternative channels to evade the limitation as shown by ‘dabba trading’. Such brokers can easily continue to do dealings via checks or liquid cash within the jurisdiction. In addition, telegram is the most preferred platform by the brokers due to its encryption capabilities.

Peer-to-Peer platforms

The crypto market in India is not limited to options when it comes to dabba trading. One can simply choose to use P2P networks whose verification is dependent on smart contracts for money transfers. This is a good way of escaping the use of international financial institutions whose operations can be linked by the RBI in future.

September 2018 remains highly awaited by crypto enthusiasts in India. The Supreme Court will finally decide whether to uphold the ban or relax the policy hence shape the dabba’s trading destiny in the country!

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