India has ranked second in the global cryptocurrency adoption index, according to the 2021 Global Crypto Adoption Index by blockchain data platform Chainalysis.
The report, which ranked 154 countries, showed that worldwide crypto adoption grew over 881% in the last year, while global adoption has grown by over 2,300% since the third quarter of 2019.
The ranking was based on three metrics including peer-to-peer (P2P) exchange trading volume, on-chain retail value received and on-chain value received. India was second only to Vietnam, followed by Pakistan and Ukraine at rank three and four respectively. India also ranked highly on P2P exchange trade volumes.
US and China's ranking was eighth and thirteenth respectively. Both countries dropped in their rankings as the P2P trade volume weighted for internet-using population declined drastically.
The report found that most of the top 20 countries were developing countries like Kenya, India, Nigeria and Tanzania. These countries have huge transaction volumes on P2P platforms when adjusted for purchasing power parity (PPP) per capita and internet-using population. Residents use P2P cryptocurrency exchanges as their primary on-ramp into cryptocurrency as they don't have access to centralized exchanges.
"Many emerging markets face significant currency devaluation, driving residents to buy cryptocurrency on P2P platforms in order to preserve their savings. Others in these areas use cryptocurrency to carry out international transactions, either for individual remittances or for commercial use cases, such as purchasing goods to import and sell," the report said.
"Many emerging markets represented here limit the amount of the national currency that residents can move out of the country. Cryptocurrency gives those residents a way to circumvent those limits so that they can meet their financial needs," it added.
Top crypto exchanges and platforms in India have been operating with limited banking access. Since March 2020, user sign-ups on crypto exchanges like WazirX have grown 4937%, with India's first crypto unicorn CoinDCX's user base seeing a growth of 700% during the same period.
Meanwhile, the RBI has raised concerns about the cryptocurrencies traded in the market and has conveyed the same to the government.
The inter-ministerial panel on cryptocurrency under the Chairmanship of Secretary (Economic Affairs) has recommended all private cryptocurrencies, except any virtual currencies issued by the state be prohibited in India.
The industry is now eagerly waiting for the proposed cryptocurrency bill, which Finance Minister Nirmala Sitharaman said has been tabled before the Cabinet and is awaiting approval.
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