Indian Crypto Traders Turn to ‘Dabba Trading’ Amid Banking Blockade
India’s central bank, the Reserve Bank of India (RBI), has been draconian on the local cryptoverse, having recently barred financial institutions from serving cryptocurrency businesses. Despite the banking blockade, Indian crypto traders have turned to the unregulated exchange method of “dabba trading,” or bucketing, to continue swapping bitcoins.
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Where There’s a Will, There’s a (Dabba) Way
As the RBI’s crypto-centric banking freeze has contributed to a general domestic migration to underground crypto commerce, bitcoin-based dabba trades are on the rise in India. The illegal trading method, traditionally used for trading stocks, has started to gain traction among some of India’s more savvy bitcoiners.
Such “bucketing” involves Indians going to local brokers with orders, upon which these brokers settle the trades overseas on foreign exchanges for their clients.
The practice is illegal in India. The dabba traders, which typically operate in urban centers like Mumbai or Surat, generally make one or two percent commissions on settlements.
RBI’s Unresearched Banking Ban Backfired
The RBI’s April 2018 dictate to prohibit banks from facilitating domestic digital exchanges was put forth due to the central bank’s rising, though admittedly unresearched, concerns over money laundering related to cryptocurrencies.
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 crypto currencies and crypto assets, raise concerns about consumer protection, market integrity and money laundering, among others.”
The plan seems to have gone awry per the recent rise in unregulated cash dealings of bitcoin in India, typified by the new wave of dabba trading in the country. Local cryptocurrency traders have found ways to trade bitcoin, whether their favored exchanges are being officially supported or not.
In light of the crackdown, several domestic crypto exchanges have launched peer-to-peer and crypto-to-crypto trading systems in an attempt to circumvent the banking ban.
For now, local crypto-asset traders anxiously await the Indian Supreme Court’s September 2018 ruling on whether the RBI’s banking ban will stand. If it doesn’t remain, dabba trading is likely to fall by the wayside once more in kind.
Will Indian Supreme Court reverse the RBI’s banking blockade on the cryptocurrency sector? Share your views in the comments section.
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