Main Points:
- India ranks first globally in cryptocurrency adoption for 2024, as per Chainalysis.
- Despite banning foreign exchanges, Indian users continue to access them through various apps.
- India received $143 billion in crypto from July 2023 to June 2024, second only to Indonesia in the CSAO region.
- The Central and South Asia and Oceania (CSAO) region handled $750 billion in cryptocurrency assets, making up 16.6% of the global crypto value received.
India’s Dominance in Cryptocurrency Adoption
India, the world’s most populous nation, is also emerging as a global leader in cryptocurrency adoption. Despite government-imposed restrictions on foreign crypto exchanges, Indian investors and traders continue to lead the world in the cryptocurrency space. According to a recent Chainalysis report, India has maintained its top position in the Global Cryptocurrency Adoption Index for 2024, outperforming countries like Nigeria, Indonesia, the United States, and Vietnam.
The Chainalysis Global Cryptocurrency Adoption Index
Chainalysis’s Global Cryptocurrency Adoption Index, which examines 151 countries, revealed that India remains at the forefront of cryptocurrency usage. This index evaluates on-chain value received, weighted by purchasing power parity, across various services like centralized exchanges (CEXs) and decentralized finance (DeFi) platforms. In India, the ongoing enthusiasm for cryptocurrencies has not been dampened by government efforts to restrict access to foreign exchanges.
Ban on Foreign Exchanges: Limited Impact on Adoption
In December 2023, the Financial Intelligence Unit (FIU) of India, under the Ministry of Finance, took action against nine foreign cryptocurrency exchanges. This included major names such as Binance, HTX (formerly Huobi), Kraken, and KuCoin, accusing them of violating anti-money laundering (AML) laws. The FIU urged the Ministry of Electronics and Information Technology to block these platforms’ websites from Indian users. Despite these restrictions, Chainalysis data revealed that these banned exchanges still accounted for a significant portion of India’s cryptocurrency market, with around 40% of the value transacted through CEXs in April 2024.
User Workarounds to Access Foreign Exchanges
Indian users have shown resilience in circumventing the ban on foreign exchanges. By using virtual private networks (VPNs) and downloading apps for these platforms, many continued to trade and invest. As of May 2024, the FIU softened its stance, imposing fines but allowing some foreign exchanges, including KuCoin and Binance, to register their operations in India. Reports suggest that two more foreign exchanges are seeking approval to resume operations in India by September 2024.
Cryptocurrency Activity in the CSAO Region
India’s prominence in the global crypto scene extends to the Central and South Asia and Oceania (CSAO) region, where it ranked second in terms of cryptocurrency value received between July 2023 and June 2024. During this period, India received $143 billion in cryptocurrency, trailing only Indonesia, which amassed $157 billion. This significant inflow of digital assets highlights India’s sustained interest in crypto despite regulatory hurdles.
CSAO: A Growing Hub for Crypto Transactions
The CSAO region saw an inflow of $750 billion in cryptocurrency over the past year, constituting 16.6% of the global crypto value received. This makes it one of the largest crypto markets globally, following North America and Western Europe. Chainalysis’s data reveals that much of this activity is driven by professional and institutional investors, with transactions exceeding $10,000 making up a large portion of the region’s cryptocurrency activity. Centralized exchanges continue to dominate the crypto ecosystem in CSAO, reflecting the growing interest among larger investors in the region.
Professional Investors Play a Key Role
The analysis by Chainalysis suggests that professional and institutional investors are becoming the key players in the CSAO crypto market. With substantial investments flowing into CEXs, high-value transactions are increasingly common. This indicates a shift from smaller, retail-driven activities to a more mature market where large-scale investors play a central role. In India, despite efforts to curb the involvement of foreign exchanges, both retail and institutional investors continue to find ways to engage in the global crypto economy.
India’s Leading Role in the Global Crypto Landscape
India’s continued leadership in cryptocurrency adoption, despite stringent regulations, underscores the country’s determination to remain a key player in the evolving digital asset space. The ability of Indian users to bypass restrictions and the country’s prominence in the CSAO region demonstrates the enduring strength of the crypto market in India. As regulatory frameworks evolve, India’s role in the global cryptocurrency landscape is likely to grow, attracting more institutional investors and bolstering the overall market. This resilience, combined with India’s large and tech-savvy population, positions the country as a critical hub in the world’s crypto economy.
