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India ranks second in cryptocurrency adoption in the world: Report

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India had an index score of 0.37 followed closely by Pakistan at third position with an index score of 0.36. Vietnam stood at the first position with an index score of 1.

India has ranked second, among 154 countries, in global cryptocurrency adoption according to the 2021 Global Crypto Adoption Index by Chainalysis, a blockchain data platform. The Global Crypto Adoption Index measures which country has the highest cryptocurrency adoption. The first index was released in 2020.

According to the report, there has been an increase in the adoption of cryptocurrency globally by 881 percent in the last year and by 2300 percent since the third quarter of 2019. 

As of the date of publishing this report, cryptocurrencies aren’t banned/illegal in India but they are unregulated thus being a grey area for investors. While a cryptocurrency bill is still in the pipeline and yet to be approved by the Union cabinet Ministry, experts believe that once regulated, crypto will emerge as a new-age asset class in the country. 

More details on the Global Crypto Adoption Index 2021

The Global Crypto Adoption Index is made up of three metrics, all of them weighted by purchasing power parity (PPP) per capita:

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  • On-chain cryptocurrency value received: Each country is ranked by total cryptocurrency activity, but the rankings are weighted to favour countries where that amount is more significant based on the wealth of the average person and the value of money generally within the country.
  • On-chain retail value transferred: The goal of this metric is to measure the activity of non-professional, individual cryptocurrency users based on how much cryptocurrency they’re transacting compared to the wealth of the average person.
  • Peer-to-peer (P2P) exchange trade volume: Under this metric, the countries are ranked by their P2P trade volume and weighted to favor countries with lower PPP per capita and fewer internet users, the goal being to highlight countries where more residents are putting a larger share of their overall wealth into P2P cryptocurrency transactions.

The data showed that an increasing number of people spanning several countries are taking the dive into cryptocurrency. The reasons behind this growing trend differ around the world – in emerging markets, people are turning to cryptocurrency to preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions. Meanwhile, crypto investments in North America, Western Europe, and Eastern Asia over the last year have been powered largely by institutional investment such as banks, insurance companies, credit unions etc. 

Countries like Kenya, Nigeria, Vietnam, and Venezuela rank high on the index because they have huge transaction volumes on peer-to-peer (P2P) platforms when adjusted for PPP per capita and internet-using population. This means that residents use P2P cryptocurrency exchanges as their primary on-ramp into cryptocurrency, often because they don’t have access to centralised exchanges.

China’s ranking dropped from fourth to 13th along with the US which ranked sixth last year and currently ranks eighth. 

Data indicates surge in crypto investments in India 

Reports show that there has been a spurt in cryptocurrency investments since the Supreme Court of India overturned an RBI circular advising entities regulated by it to not deal in cryptocurrency. 

According to a statement released by WazirX, an India-based cryptocurrency exchange:

  • It has registered an increase of 2658% in user registrations from tier-II and tier-III cities such as Ahmedabad, Lucknow, Ranchi, Imphal, etc. 
  • WazirX claimed to have recorded over $21.8 Billion in trading volume in 2021 to date with a total base of 7.3 million users
  • 55 percent of sign-ups on WaxirX were from tier-II and tier-III cities in 2021 with cities like Ahmedabad, Lucknow, and Patna reporting an average growth of 2950%
  • Tier-III cities like Ranchi, Imphal, and Mohali reported average growth of 2455% 

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