India has once again topped the global charts in cryptocurrency adoption, according to a recent report by blockchain analytics firm Chainalysis. This marks the second consecutive year that India has led in this domain, despite the country’s stringent regulatory environment and high trading taxes.
The Chainalysis report, which evaluates cryptocurrency usage across four sub-categories in 151 countries, highlighted India’s significant engagement with both centralized exchange and decentralized finance (DeFi) assets from June 2023 to July 2024. Despite a challenging regulatory landscape, Indian investors have demonstrated remarkable resilience and enthusiasm for digital currencies.
Since 2018, India has maintained a tough stance on cryptocurrencies. In December 2023, the Financial Intelligence Unit (FIU) issued show-cause notices to nine offshore cryptocurrency exchanges for failing to comply with local regulations. This move is part of a broader effort to regulate and monitor the burgeoning sector more closely.
"India has also got a fairly wide spread level of adoption across different assets of crypto despite restrictions, implying new participants to crypto would have been participating via services that were not banned," said Eric Jardine, research lead at Chainalysis. Jardine's comments underscore that, despite regulatory constraints, the adoption of cryptocurrencies has persisted robustly in India, driven by innovative methods to bypass restrictions and engage with digital assets.
Recent developments suggest a potential easing of some restrictions. Binance, the world's largest cryptocurrency exchange, faced a hefty fine of 188.2 million rupees ($2.25 million) in June. This fine followed Binance's registration with the FIU, an effort to resume operations in India. Similarly, KuCoin, another prominent crypto exchange, registered with the FIU in March and was subjected to a smaller penalty of 3.45 million rupees. These actions reflect ongoing regulatory adjustments and their impact on the crypto market.
The growth of cryptocurrency in India can be attributed to several key factors. First, despite regulatory hurdles, the demand for digital assets remains strong. The wide adoption across various crypto assets suggests that participants are finding ways to engage with cryptocurrencies through alternative, non-banned services. As Jardine noted, the gradual rollback of some restrictions, such as those affecting Binance, is expected to further boost adoption in the country.
India's experience mirrors trends observed in other central and South Asian countries, where cryptocurrency adoption is also on the rise. According to Chainalysis, seven of the top 20 countries in its global adoption index are from these regions, including Indonesia, Vietnam, and the Philippines. These countries, despite having lower purchasing power per capita, have shown impressive decentralized transaction volumes, particularly in retail-sized transfers of under $10,000.
In Indonesia, for example, the government has banned the use of cryptocurrencies as a means of payment but allows investment in digital assets. This regulatory stance has not hindered trading activity; instead, it has led to substantial inflows, with the country recording $157.1 billion in digital asset trading over the past year.
India's leading position in global cryptocurrency adoption, despite a challenging regulatory environment, highlights the country’s strong and growing interest in digital assets. The gradual easing of restrictions and the resilience of Indian investors suggest that the cryptocurrency market in India will continue to thrive and expand.
(Source:www.business-standard.com)
The Chainalysis report, which evaluates cryptocurrency usage across four sub-categories in 151 countries, highlighted India’s significant engagement with both centralized exchange and decentralized finance (DeFi) assets from June 2023 to July 2024. Despite a challenging regulatory landscape, Indian investors have demonstrated remarkable resilience and enthusiasm for digital currencies.
Since 2018, India has maintained a tough stance on cryptocurrencies. In December 2023, the Financial Intelligence Unit (FIU) issued show-cause notices to nine offshore cryptocurrency exchanges for failing to comply with local regulations. This move is part of a broader effort to regulate and monitor the burgeoning sector more closely.
"India has also got a fairly wide spread level of adoption across different assets of crypto despite restrictions, implying new participants to crypto would have been participating via services that were not banned," said Eric Jardine, research lead at Chainalysis. Jardine's comments underscore that, despite regulatory constraints, the adoption of cryptocurrencies has persisted robustly in India, driven by innovative methods to bypass restrictions and engage with digital assets.
Recent developments suggest a potential easing of some restrictions. Binance, the world's largest cryptocurrency exchange, faced a hefty fine of 188.2 million rupees ($2.25 million) in June. This fine followed Binance's registration with the FIU, an effort to resume operations in India. Similarly, KuCoin, another prominent crypto exchange, registered with the FIU in March and was subjected to a smaller penalty of 3.45 million rupees. These actions reflect ongoing regulatory adjustments and their impact on the crypto market.
The growth of cryptocurrency in India can be attributed to several key factors. First, despite regulatory hurdles, the demand for digital assets remains strong. The wide adoption across various crypto assets suggests that participants are finding ways to engage with cryptocurrencies through alternative, non-banned services. As Jardine noted, the gradual rollback of some restrictions, such as those affecting Binance, is expected to further boost adoption in the country.
India's experience mirrors trends observed in other central and South Asian countries, where cryptocurrency adoption is also on the rise. According to Chainalysis, seven of the top 20 countries in its global adoption index are from these regions, including Indonesia, Vietnam, and the Philippines. These countries, despite having lower purchasing power per capita, have shown impressive decentralized transaction volumes, particularly in retail-sized transfers of under $10,000.
In Indonesia, for example, the government has banned the use of cryptocurrencies as a means of payment but allows investment in digital assets. This regulatory stance has not hindered trading activity; instead, it has led to substantial inflows, with the country recording $157.1 billion in digital asset trading over the past year.
India's leading position in global cryptocurrency adoption, despite a challenging regulatory environment, highlights the country’s strong and growing interest in digital assets. The gradual easing of restrictions and the resilience of Indian investors suggest that the cryptocurrency market in India will continue to thrive and expand.
(Source:www.business-standard.com)