India has emerged as the leader in grassroots cryptocurrency adoption, according to the 2023 Global Crypto Adoption Index released by blockchain analytics platform Chainalysis. The index measures crypto adoption by everyday residents, rather than by transaction volumes or mining activities. India scored 0.87 out of 1 in the index, followed by Vietnam (0.84) and Pakistan (0.82).
Crypto value received and sent
India also ranked second in the top countries by raw estimated crypto value received between July 2022 and June 2023, with around $250 billion in crypto value. The U.S. topped the list with nearly $1 trillion in crypto value received during the same period. India also sent around $240 billion in crypto value, making it the third-largest country by crypto value sent, behind the U.S. ($1.2 trillion) and China ($400 billion).
Challenging tax regime and regulatory environment
India’s impressive crypto adoption rates came despite its “challenging” tax regime and regulatory environment, as noted by Chainalysis’ report. India currently taxes crypto gains at 30% and also deducts 1% at the source (TDS). The report observed that many Indian users were drawn to international exchanges that did not collect TDS taxes effectively, resulting in a loss of revenue for Indian exchanges. The report also highlighted the legal challenges faced by Indian exchanges, such as WazirX, which had its funds frozen and was investigated by the Enforcement Directorate last year.
Popular crypto assets and user preferences
Indian crypto traders invest in top value assets such as Bitcoin and Ether, but also enjoy meme-based assets such as Dogecoin and the Shiba Inu token. The report stated that Indian users were more likely to use crypto for remittances, savings, and peer-to-peer transactions than users from other countries. The report also suggested that India’s large population, young demographics, high internet penetration, and growing digital economy were factors that contributed to its high crypto adoption.
Need for clear and supportive crypto regulations
The report urged the Indian government to frame more fleshed-out crypto regulations that would boost both entrepreneurs and investors in the sector. The report also recommended lowering the tax rate on crypto gains to make it more attractive for users. The report stated that India had a huge potential to become a global leader in crypto innovation and adoption if it embraced a positive and supportive regulatory stance.