Cointime

  • BTC $16271.07 0.13 %
  • ETH $1178.43 0.25 %
  • BCH $111.20 -0.09 %
  • SOL $13.41 0.15 %
  • XRP $0.39 0.05 %
  • BNB $293.70 0.17 %

The State of Cryptocurrency Adoption In India

Crypto Saving Expert· 6 min read

Demand for new ways of value storage is often connected to economic happenings and citizens taking matters into their own hands. In recent years, many people have been turning to cryptocurrency to find solutions to the current flawed financial system. According to blockchain analytics firm Chainalysis, emerging markets are consistently at the forefront of global crypto adoption. But does this mean crypto adoption is proving to be more successful in emerging economies and if so, why? And how exactly can crypto adoption offer real, long-lasting solutions that change existing unequal financial and economic structures?

In this new series we’ll be talking about cryptocurrency adoption in emerging markets.

Financial Inclusion in India: An Overview

While India is one of the fastest-growing economies, it is also one of the most financially unequal countries in the world. The top 10% of the Indian population controls 80% of the total national wealth. As CNN described it: “In India, the wealth of 16 people is equal to the wealth of 600 million people.” About 60% of India’s nearly 1.3 billion people live on less than $3.10 a day, the World Bank’s median poverty line. In countries like India, many people are also underserved by traditional financial institutions or unable to access or even create a bank account. Financial inclusion — providing universal access to financial services and education on how to use it — is crucial for strong economic development. About 190 million adults in India currently do not have a bank account, making it the world’s second-largest nation in terms of unbanked population after China (factly.in). Minimum balance requirements for bank accounts and service fees were often barriers for people living in poverty. Lack of official forms of identification or significant distance to financial institutions or banks were also often cited as a disadvantage.

Internet access is widespread though. A report named [email protected] stated that around 87% of all Indian households will have a solid internet connection by 2025. Additionally, India’s population is young. Half of the 600 million people currently living in the country are under 25. Delhi journalist Snigdha Poonam states: “No matter how poorly placed [young Indians] find themselves now, they make up the world’s largest ever cohort of like-minded young people. This effect will change the world in ways we can’t yet imagine” (theguardian.com). In addition, the literacy rate among young Indians has increased to over 90% being able to read or write. Coupled with the prevalence of social media and the internet, this has created a digitally savvy population driving a culture of innovation, entrepreneurship, diversity and digital connection. According to research by YouGov, 49% of Indians are early tech adopters and are eager to buy new products and adopt new technologies, too. The young, tech-savvy and curious population, combined with financial inequality and desire for change, have been key factors driving cryptocurrency curiosity and adoption throughout the country.

Cryptocurrency Adoption in Emerging Markets

Emerging markets are consistently at the forefront of global crypto adoption. “One reason for this could be the value that users in emerging markets get from cryptocurrency. These countries dominate the adoption index, in large part because cryptocurrency provides unique, tangible benefits to people living in unstable economic conditions,” the Global Adoption Report states (coindesk.com). Kim Grauer, Director of Research at Chainalysis, further supports this research: “We found that a lot of people simply don’t have the same level of access to investments and instead turn to crypto offerings. We see that a lot in places like India and Vietnam, where there’s a young, tech-savvy population who are starting to have a disposable income” (forbes.com). Cryptocurrencies are seen by many as a safe haven, especially in periods of economic pressures. Despite weaker public sentiment on cryptocurrencies in the current bear market, demand has remained resilient in emerging economies.

India at the forefront of cryptocurrency value received — Chainalysis: The Geography Of Cryptocurrency Report 2022

As mentioned above, many emerging markets have a high amount of unbanked citizens. These disparities in financial inclusion drive emerging market citizens to adopt cryptocurrencies and decentralised exchanges. Kim Grauer states that much of the adoption in India was also supported by NFT marketplaces, such as Tiger Global and FanCraze. Many investors were wary of the bear markets and thus turned to an asset built around their favourite pastime, making it more accessible and showcasing the different ways of entering the cryptocurrency world. “India was a good example of a new population of people coming into the fold because of use cases afforded by DeFi,” Grauer said. The growing number of cryptocurrency adopters is shifting the investment paradigm from gold to digital currencies, driven mainly by the country’s younger population. Many tech-savvy young adults find it easier to invest in cryptocurrency than gold due to the processes involved with gold. Moreover, cryptocurrencies open up a new asset class for consumers to grow their wealth by investing in digital currency.

Cryptocurrency in India Today

The cryptocurrency industry in India is rapidly gaining momentum. Several factors have been attributed to the growing popularity: (1) India leading the world in terms of growth in adoption of the internet, (2) the country’s flourishing tech industry combined with a young tech-savvy generation and (3) blockchain-based games and NFTs proving to be consistently popular. According to a report by cryptocurrency exchange KuCoin, the Indian cryptocurrency market is expected to reach $241 million by 2030. The survey revealed that roughly 115 million Indian citizens either hold cryptocurrency or have traded cryptocurrency in the past 6 months, accounting for 15% of the Indian population aged 18–60. Indian newspaper Scroll recently published an article about how cryptocurrencies are so popular in India that teenagers were investing their pocket money in them. Hashir Hussain, a 17-year-old student from Kolkata, states: “I saw that the blockchain system is convenient and futuristic. It’s better to invest at an early age in new innovations” (scroll.in).

In March 2022, the Indian government passed a controversial tax proposal, with traders having to pay a capital gains tax of 30% on crypto transactions and a 1% tax on any transactions. India’s Finance Minister justified this decision by stating that there had been a phenomenal increase in transactions in virtual digital assets, which made it imperative to provide for a specific tax regime. Most citizens heavily opposed these taxes. Whilst crypto regulations can definitely dampen activity; they haven’t stopped the pace of innovation in countries like India. Most importantly: the government is open to and excited about cryptocurrency and as of November 2022 is currently working on the country’s crypto policy. Finance Minister Nirmala Sitharaman stated that the government wants to establish a technology-driven regulatory framework, with further regulations on the legality of crypto coming early next year. We can see that cryptocurrency adoption has rapidly gained momentum in India despite tax hurdles being put in the way of cryptocurrency progression. Many cryptocurrency exchanges believe that the early adoption of digital currencies will help India gain an advantage in the steadily growing global cryptocurrency ecosystem. If India’s flourishing tech ecosystem continues to grow as rapidly as currently, we see India well positioned to be a global leader in the cryptocurrency space in the near future.

~By Tina~

All Comments