Following the crypto tax and regulatory uncertainty, India fell two spots to fourth place in a list of 20 countries with the highest cryptocurrency adoption rate, which was dominated by emerging markets, according to crypto analytics platform, Chainalysis.
The American blockchain analytics company strives to measure the popular adoption of cryptocurrency. Therefore, instead of ranking countries on raw cryptocurrency volumes, this ranking highlights crypto market activity from non-institutional and non-professional investors.
In 2021, investments in digital assets have taken India’s young professionals by storm, catapulting India to the second position in Chainalysis’ Global Crypto Adoption Index. In 2020, India fell to fourth place, although it is still in the top 20 countries in the world for crypto adoption.
Activity area previously reported that as legal and regulatory pressures plague Indian exchanges, crypto volumes have fallen further. Institutional investors fled to global exchanges and risk-averse Indians also stopped their personal crypto investments.
TDS on cryptos
The average spot trading volume of major Indian exchanges declined in July after the Indian government imposed a 1% TDS on the sale of cryptocurrency assets. Volumes continued to decline in August amid the WazirIX controversy, which placed 10 more exchanges under the focus of the Enforcement Branch. According to data shared by Crebaco, a cryptocurrency research firm, WazirIX, ZebPay, and Bitbns showed a drop in transaction volumes of 18%, 20%, and 42%, respectively, between July and August.
This comes even as global crypto markets have started to show the first signs of recovery. Professional and non-professional investors have shifted crypto trading to foreign exchanges, according to media reports in August. Experts note that Indian exchange volumes will continue to decline until the Indian government removes tax burdens on cryptocurrency trading and regulates exchanges operating in India.
Meanwhile, the Reserve Bank of India has shown little interest in regulating digital assets, a sentiment that has likely deepened due to recent issues with the ED.
September 15, 2022