Apparently, the ban on cryptocurrencies was not enough to prevent Indians from purchasing and trading digital assets.
As a matter of fact, you can even find peer-to-peer models of exchange in India! Notably, a small fraction is resorting to “Dabba trading.
A local outlet, Business Today, reported on July 30, 2018, that Dabba trading is indeed running trading operations outside the order books, these operations usually take an illegal setting different to a formal OTC market.
What is Dabba trading anyway?
Dabba is a well-known model most Indians used since decades for stock trades, after India’s ban on cryptocurrencies, Dabba has witnessed an upswing since then, especially after April 2018’s decision of stopping all banking activities for the country’s vibrant crypto market.
Plus, the Dabba process is very similar to the hawala network, an underground logistics framework used mainly by criminals for transporting goods and money around the world. However, instead of exchanging chits at the destination, Dabba traders execute trades on a platform connected with a foreign bank, usually based in Dubai, Europe, and the U.K.
The report has also mentioned some of the Dabba brokers who are currently present in the Indian cities of Surat, Kolkata, Ahmedabad, and Mumbai, cities known for their financial eminence and growing industries.
How do they work?
Very simple. The brokers typically receive trades from the investor in cash and buy bitcoins using an overseas trading account they have access to. When the investor decides to cash out, the broker simply pays out the difference in cash, while selling his bitcoins in the foreign trading account and routing money via hawala.
Whereas some brokers prefer to keep their records clean, and so by having international bank accounts they conduct cross-border transfers to avoid the need of using the risky hawala channel. Trades are usually settled once per day, but reports suggest some settlements could take a week.
Since the Indian government has an official maximum annual remittance limit of $250,000, brokers don’t really respond to these restrictions and continue their activities in cash or cheque.
For conversations, traders and brokers use Telegram instead of WhatsApp or Facebook, mostly for the encryption services it provides and for its protecting identity.
In the meantime, India is still waiting for the judgment on the cryptocurrencies that will be released in September 2018, and most Indians are having their finger crossed over this, the judgment will include trading, regulation, and future use cases.