New Delhi, September 12: In a surprising turn of events, India has retained its position as the global leader in cryptocurrency adoption for the second year in a row, according to a new report by blockchain analytics firm Chainalysis. This comes despite the country’s stringent regulations and high trading taxes on cryptocurrencies.
The report notes a shift in global crypto adoption trends. While growth was primarily driven by lower-middle-income countries in 2023, there’s been a surge in activity across all income brackets this year, with high-income countries experiencing a decline since early 2024. India’s ranking reflects this broader shift, with strong participation in both centralized exchanges and decentralized finance (DeFi) assets between June 2023 and July 2024.
However, India’s relationship with cryptocurrencies remains complex. Since 2018, the government has maintained a cautious stance, with the Financial Intelligence Unit (FIU) cracking down on non-compliant exchanges. In December 2023, the FIU issued show-cause notices to nine offshore exchanges, and major players like Binance and KuCoin faced hefty penalties earlier this year for regulatory violations.
Interestingly, the Chainalysis report also highlights a regional trend. Seven of the top 20 countries in their global adoption index hail from Central and South Asia, including Indonesia, Vietnam, and the Philippines. This suggests a potential cultural affinity for cryptocurrencies within the region.
While India leads in adoption, the report also reveals a preference for smaller transactions. Countries with lower purchasing power see significantly more decentralized transactions under $10,000. This aligns with Indonesia’s case, where crypto usage is banned as a means of payment but allowed for investment, resulting in high trading volumes (with $157.1 billion in inflows over the past year).
This news comes amidst ongoing discussions regarding offshore crypto platforms seeking to re-enter the Indian market. The Finance Ministry’s FIU is scheduled to hear petitions from seven major exchanges (Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, and Bitstamp) later this week. These platforms were previously banned for violating anti-money laundering regulations, but could potentially resume operations if they settle outstanding dues estimated at INR 2,900 crore.
India’s future crypto landscape remains to be seen. While the country leads in adoption, regulatory hurdles and potential tax burdens continue to create uncertainties. The upcoming FIU hearings may shed light on the government’s stance towards established offshore exchanges, potentially impacting the overall crypto ecosystem in India.
