India Dominates Global Crypto Adoption for Second Year Despite Regulatory Challenges
India has emerged as a leader in global cryptocurrency adoption for the second consecutive year, defying tough regulatory hurdles and high trading taxes, according to a report by blockchain analytics firm Chainalysis. Despite facing regulatory challenges since 2018, India ranked high in the usage of centralized exchanges and decentralized finance assets from June 2023 to July 2024.
The Financial Intelligence Unit (FIU) in India issued show-cause notices to nine offshore cryptocurrency exchanges in December 2023 for non-compliance with local regulations. However, the country has seen widespread adoption of various crypto assets, indicating that new participants have been entering the market through services that were not banned.
The recent rollback of restrictions, such as with Binance, the world's largest crypto exchange, is expected to further boost adoption in India. Binance was fined 188.2 million rupees ($2.25 million) in June after registering with the FIU to resume operations in the country. Similarly, KuCoin, another crypto exchange, faced a smaller penalty of 3.45 million rupees after registering with the watchdog.
According to Chainalysis, seven of the top 20 countries in its global adoption index are located in Central and South Asia, including Indonesia, Vietnam, and the Philippines. The report also highlighted that countries with lower purchasing power per capita saw a significant amount of decentralized transaction volume in retail-sized transfers of under $10,000 worth of crypto.
Despite banning the use of cryptocurrencies for payments, Indonesia saw robust trading activity, recording $157.1 billion in inflows for digital assets in the 12 months leading up to July. This indicates a growing interest in cryptocurrency investment in the country.
In conclusion, India's continued dominance in global crypto adoption, despite regulatory challenges, highlights the resilience and growing interest in digital assets among investors. The recent easing of restrictions and fines on major exchanges are expected to further fuel adoption and trading activity in the country and potentially impact the broader cryptocurrency market. It is essential for investors to stay informed about regulatory developments and market trends to make informed decisions about their investments in cryptocurrencies.