Indians Trade Bitcoin (BTC) Despite the RBI Ban
Legislative barriers in India do not hinder crypto holders to continue trading Bitcoin (BTC).
It seems that the restrictions imposed by the Reserve Bank of India have influenced crypto traders to find creative solutions to omit any penalty. We would like to remind you that the RBI approved last month the law that concerns financial institutions and their interaction with cryptocurrencies. Even so, Indian traders continue to find solutions in conformance with the regulatory framework.
Business Today exemplified a method they use:
“Ever since the banks were stopped from providing financial services to digital exchanges, the trade of bitcoin through Dabba trading has increased manifold.”
About Dabba trading
Dabba trading means that transactions are not “connected with commodity or stock exchange”. As a substitute, crypto holders transfer their funds via “hawala network” and trade “using an overseas bank trading account,” usually located in the UK and Dubai.
The media outlet described that this alternative “has seen an upsurge as traditional Dabba operators are accepting bets on bitcoin too, giving a boost to their overall earning.”
“Such traders are based out of Ahmedabad, Surat, Rajkot, Kolkata and Mumbai. They work as a bridge between a customer and foreign trading company. The broker accepts money in cash, buys bitcoins using an overseas trading account and sells them when the bet placed in India is settled. The difference is paid in cash to the customer,” added the media.
Furthermore, most Dabba transactions are realized using Telegram- “cloud-based instant messaging service with end-to-end encryption and the money in cash is routed through the hawala channels“. The deals are also operated through official intermediaries such as brokers who own bank accounts in India plus overseas.
“The money is then routed through official or unofficial channels to the foreign account where bitcoins are bought and sold. The money is usually paid in cash or cheque to the investor following the deduction of commission or any loss,” Business Today elaborated.
Moreover, in order not to violate the new law, several cryptocurrency exchanges based in India have switched to peer-to-peer trading services. Among these, we identify Koinex, Wazirx, and Coindelta, Giottus, Instashift, and Zecoex.