Several ways of cryptocurrency trading have come into highlight following Reserve Bank of India’s (RBI) ban over digital currency tradings. One such way is Dabba trading where brokers use a client’s trade outside the official platform.
This illicit means of trading has seen an increase with the traditional Dabba operators accepting offers on Bitcoins. It has certainly given a significant boost to their earnings. The Dabba trading is usually used for trading in stocks. However, it has seen a notable rise in its cryptocurrency usage following Bitcoin’s fall from $20,000 in December 2017 to $8,000 in July 2018.
In this process, the broker does not execute a trade on its system which is connected with commodities or stock exchange. Instead, he carries out the trade by transferring money through hawala network using an overseas bank trading account. Such accounts are based in Dubai, Europe and the UK. The trade of Bitcoin through Dabba trading has increased exponentially since the banks were stopped from providing financial services to digital exchanges. The experts say that because of this, the entire purpose of the ban by RBI seems to have been defeated.\
Such traders are usually based out of Ahmedabad, Surat, Rajkot, Kolkata and Mumbai. And they work as a bridge between a customer and foreign trading company. Here, the broker buys Bitcoin using an overseas account and accepts that money in cash. He sells them back when the bet placed in India is settled and the customer receives the difference in cash. These margins are settled in the same day or maximum by a week. The money in cash is routed through hawala channels, whereas the conversation takes place through Telegram as the app has end-to-end encryption.