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Government Ban Fuels Underground Cryptocurrency Trading in India

Government Ban Fuels Underground Cryptocurrency Trading in India

Since the ban on cryptocurrency, traders in India have resulted to underground crypto trade to buy or sell their favorite coins. The efforts of the Indian governments seem to have bore little fruit as cryptocurrency trade in the country continues to grow.

Traders have resulted to Dabba trading which according to reports, is trading outside the normal traditional settings. This is usually in an illegal environment different to a formal OTC market. The Dabba system has been in place for many years allowing traders, especially in the Indian stick trade to conduct their operations behind the set regulations.

The ban imposed by the Indian government has forced many crypto holders and traders to move to this trading environment. Since the ban, Dabba trading activities have significantly increased all thanks to cryptocurrency trade.

Dabba operates by using brokers to link the customers to the commodities they wish to buy. These brokers use banks situated outside the country especially in Europe, Dubai and the UK.  Dabba brokers in India are based in Ahmedabad, Surat, Rajkot, Kolkata, and Mumbai. It facilitates trade by enabling the brokers accept cash from the customers, buy bitcoin and other cryptocurrencies using an overseas trading account they own or have access to and then sell them when the customer wants to cash in his or her money.

To avoid getting arrested or criminal liability, brokers, and customers communicate through the messaging app Telegram. The platform offers a secure line of communication compared to other platforms like Facebook and Whatsapp.

Dabba brokers also use official channels to conduct their business. These brokers have bank accounts in India and also abroad. Once the money is transferred into their accounts in India ,they wire the same to their accounts abroad where the cryptocurrencies are bought and sold.  Customers get the cash after the brokers deduct their cut for the transaction. Brokers have also found a way around the Reserve Bank of India’s guideline that limit individual annual remittance amount to $250,000. To avoid this brokers accept cash and cheque transactions

Some of the cryptocurrency users in the country are still trading in cryptocurrencies but not through Dabba. They have resulted to peer-to-peer exchanges like Koinex Loop and WazirX which have fewer risks.