Indians Use Creative Means to Trade Bitcoin Amid RBI Ban
Indian crypto traders have found some creative ways to trade cryptocurrencies, especially bitcoin, to circumvent the crypto banking ban imposed by the country’s central bank. The Reserve Bank of India has banned financial institutions from providing services to companies dealing in cryptocurrency.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
Money Finds a Way
Following the crypto banking ban by the Reserve Bank of India (RBI) which went into effect last month, Indian traders are finding multiple ways to bypass the ban.
One of the methods they are using is referred to as Dabba trading, Business Today recently reported:
Ever since the banks were stopped from providing financial services to digital exchanges, the trade of bitcoin through Dabba trading has increased manifold.
In Dabba trading, brokers do not execute trades on a “system connected with commodity or stock exchange,” the news outlet described. Instead, they transfer “money through hawala network” and trade “using an overseas bank trading account,” most of which are based in Europe, especially the UK and Dubai.
While “mostly used for trading in stocks,” the publication explained that this method “has seen an upsurge as traditional Dabba operators are accepting bets on bitcoin too, giving a boost to their overall earning,” adding:
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.
Where are the Deals Happening?
Most Dabba deals are done “via messaging app Telegram, cloud-based instant messaging service with end-to-end encryption and the money in cash is routed through the hawala channels,” the publication detailed.
Citing that “such deals are also happening through official channels like brokers who maintain bank accounts in India as well as overseas,” the news outlet elaborated:
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.
Cash and P2P Markets
The use of physical cash for crypto trading has also surged since the RBI ban took effect, the news outlet noted. “The cash market existed way before the RBI diktat on cryptocurrencies but it has now flourished as people with illicit cash are using it to earn more money.”
In addition, a number of crypto exchanges in India have launched peer-to-peer (P2P) trading solutions to circumvent the ban. News.Bitcoin.com recently reported on a few crypto exchanges launching P2P trading services – Koinex, Wazirx, and Coindelta. A few others such as Giottus, Instashift, and Zecoex also offer some forms of P2P systems. Furthermore, Chinese exchange Huobi has reportedly said that it will launch P2P trading in India.
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by Kevin Helms via Bitcoin News