India leads in grassroots cryptocurrency adoption: Report

Chainalysis’ 2023 crypto adoption index put India at the top of the list which measures grassroots cryptocurrency adoption across countries

Chainalysis’ index, issued as part of its yearly ‘Geography of Cryptocurrency’ report, focuses on crypto adoption by everyday residents [File] | Photo Credit: REUTERS

India stands first when it comes to grassroots cryptocurrency adoption, according to blockchain analytics platform Chainalysis’ 2023 Global Crypto Adoption Index released this month.

Chainalysis’ index, issued as part of its yearly ‘Geography of Cryptocurrency’ report, focuses on crypto adoption by everyday residents, rather than measuring only transaction volumes.

While India beat other countries which had high rates of crypto trading as well as mining, it also came in second when looking at the top countries by raw estimated crypto value received between July 2022 and June 2023. India recorded around $250 billion in crypto value in the past year, behind only the U.S. and the roughly $1 trillion it recorded in crypto value received during the same period.

Chainalysis’ report pointed out that India’s crypto adoption rates had soared despite the country’s tax regime and regulatory environment, which it called “’challenging”.

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India currently taxes crypto gains at 30% and also deducts 1% at the source.

“While every exchange operating in the country is required to collect TDS taxes from Indian users, many international exchanges aren’t doing so effectively, which may be drawing Indian users to them as opposed to exchanges focused primarily on India,” noted Chainalysis’ report, pointing to a rise in web traffic from India to foreign crypto exchanges after TDS implementation last year.

The report observed that Indian exchanges were losing out due to this irregularity.

Homegrown crypto exchanges have also met with legal action in the country. WazirX, for example, saw its funds frozen and was investigated by the Enforcement Directorate (ED) last year.

“ED searches the Director of WazirX Crypto-Currency Exchange & freezes its Bank assets worth Rs 64.67 Crore for assisting accused Instant Loan APP Companies in laundering of fraud money via purchase & transfer of virtual crypto assets,” tweeted the regulator on August 5 in 2022.

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.

While industry stakeholders called on the government to frame more fleshed out crypto regulations to boost both entrepreneurs and investors, the Indian government has remained wary of the market.

Crypto traders last year also urged the government to lower its 30% tax on gains.