India was ranked second in terms of crypto adoption, ahead of countries such as the US, UK, and China, the 2021 Chainalysis Global Crypto Adoption Index study revealed. Vietnam was the top market in terms of adoption while Pakistan was ranked third, as per the study.
The worldwide crypto adoption grew by 880% between June 2020 and July 2021, according to Chainalysis, which is a blockchain data platform.
The Indian Supreme Court’s March 2020 ruling gave a much-needed push to the country’s crypto bull market. The ruling had set aside the Reserve Bank of India’s April 2018 directive banning banks and finance companies from dealing in virtual currencies.
Following the ruling, India’s top exchanges doubled down on advertising and educating users about the asset class, which has become popular among investors under the age of 25, as per media reports.
In India, top crypto exchanges and platforms have been offering services, albeit with limited banking access. The market now awaiting the proposed cryptocurrency bill, which has already been tabled before the Cabinet.
India’s largest crypto exchange, WazirX, last week claimed that it saw more than 2,648% growth in user sign-ups from tier II and tier III cities in India. It has a user base of 7.3 million users and clocked more than $21.8 billion in trading volumes this year.
WazirX’s rival Coinswitch Kuber, also saw a 135% monthly growth in user sign-ups from smaller towns, which made up 61% of the exchange’s total business.
India’s “huge expatriate population” makes it the world’s number one remittance recipient in the crypto space, a separate report by Finder revealed.
“Our data shows that residents of more and more countries around the world are taking the dive into cryptocurrency or seeing existing adoption increase,” Chainalysis said in its latest report.
Chainalysis said that its research suggests that reasons for the increased adoption differ around the world.
In emerging markets, many turn to cryptocurrency to preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions, while adoption in North America, Western Europe, and Eastern Asia over the last year has been powered largely by institutional investment.
“In a year when cryptocurrency prices rose dramatically, each region’s respective reasons to embrace the asset class seem to have proven compelling,” Chainalysis added.
Several countries in emerging markets, including Kenya, Nigeria, Vietnam, and Venezuela rank high on Chainalysis’ index in large part because they have huge transaction volumes on peer-to-peer (P2P) platforms when adjusted for PPP per capita and internet-using population.
“Our interviews with experts in these countries revealed that many residents use P2P cryptocurrency exchanges as their primary on-ramp into cryptocurrency, often because they don’t have access to centralized exchanges,” it added.
Last year, China ranked fourth on our global adoption index while the US ranked sixth. This year, the US ranks eighth while China ranks 13th.
The biggest reason both countries dropped is that their rankings in P2P trade volume weighted for internet-using population declined dramatically — China fell from 53rd in this component to 155th, while the US fell from 16th to 109th, Chainalysis said.
The growing transaction volume for centralized services and the explosive growth of Decentralized finance (DeFi) are driving cryptocurrency usage in the developed world and in countries that already had substantial adoption, while P2P platforms are driving new adoption in emerging markets.
“Our biggest question for the next twelve months is how much adoption will continue on those platform categories compared to new and emerging models we haven’t seen yet. The clear takeaway though is this: Cryptocurrency adoption has skyrocketed in the last twelve months, and the variation in the countries contributing to that show that cryptocurrency is a truly global phenomenon,” Chainalysis said.