BTC Wires

Indian Traders Making Use of ‘Dabba’ To Illegally Trade In Crypto Assets

In order to circumvent the Central Bank’s ruling, the Indian crypto traders have moved towards another unregulated exchange method. They have resorted to ‘Dabba Trading’ or bucketing to continue with swapping Bitcoins.

The Reserve Bank of India (RBI) has been very strict when it comes to the local cryptoverse. It recently prohibited the financial institutions from working in the cryptocurrency businesses. But this is where the Indian concept of ‘jugaad’, which can be loosely translated to a life hack came into the picture.

With the ban on the cryptocurrency businesses, the number of dabba trades have been increasing substantially.

Dabba trade follows the basic practice of the investors going to local brokers with their requirements after which the brokers fix the trades overseas on foreign exchanges. They usually charge a commission of 1-2%. This bucketing was originally used for trading stocks but has become popular with cryptocurrencies as well. Obviously, the practice is illegal in India, but it becomes really difficult for the authorities to trace these transactions. The dabbawaalas usually work in the urban cities like those of Mumbai and Surat.

The RBI, in its April 2018 directive, clearly mentioned that the banks have been forbidden from streamlining domestic digital exchanges. This was mainly done over rising concerns about money laundering. At the time, the RBI directive stated:

“Technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system. However, Virtual Currencies (VCs), also variously referred to as cryptocurrencies and crypto assets, raise concerns about consumer protection, market integrity and money laundering, among others.”

The plan to put a hold on the cryptocurrency trading has failed miserably as there has been a significant rise in the unregulated cash dealings of bitcoin. Having the support of these dabba traders, the local cryptocurrency enthusiasts have surely found a way to continue dealing and investing in the cryptocurrency irrespective of the fact that whether their preferred exchanges are being officially supported or not.

A Dabba trader said

“The Indian individual/user gives, say, 1 lakh in cash to the dabba operator as margin money, on which he can lay bets up to 4 lakh on Bitcoins or any other cryptocurrency. When the cash is given and bets are placed, actual buy or sell orders are given in Dubai or the UK”