India was not only amongst the top three markets in Global Crypto Adoption Index but investors in the country are also starting to mature despite lack of regulatory clarity, according to an October 2021 report from blockchain-based research firm Chainalysis.
The firm said that the cryptocurrency market in the Central and Southern Asia and Oceania (CSAO) market was worth over $572.5 billion between July 2020 and June 2021 and represented 14% of the global transaction value during that time period. India, Vietnam and Pakistan were the top three markets in terms of crypto adoption.
DeFi takes centre stage
Interestingly, India’s cryptocurrency market isn’t growing in terms of trading alone, but also in terms of adoption for Decentralized Finance (DeFi) applications. “India has a much bigger share of activity taking place on DeFi platforms at 59%, versus 47% for Vietnam and 33% for Pakistan. All three regions grew substantially over the last year. Pakistan experienced the most growth at 711%, just ahead of India at 641%,” the report said.
Further, the report noted a difference in the level of maturity and sophistication between the Indian and the Vietnamese/Pakistani crypto markets. The firm said that transaction sizes in India were much higher, suggesting more mature investors entering the space. According to the reports, large institutional sized transfers of over $10 million accounted for 42% of transactions in India, while they accounted for 28% and 29% of transactions in the other two countries.
“Tons of Indian developers, fund analysts, and independent freelancers working for overseas employers have started requesting to be paid in cryptocurrency. It’s a very bottom-up way of adopting,” Krishna Sriram, Managing Director at blockchain security and solutions company Quantastamp, said.
Increasing DeFi adoption can help the crypto industry, which has been at loggerheads with the government, gain more legitimacy in India. Such apps use blockchain technology to bring accountability and transparency to financial apps, like those used for lending, investment funds and more.
The inability to control the crypto market and lack of transparency in many transactions has been one of the chief concerns for many governments around the world, including India’s. Growing DeFi adoption brings more businesses into the fold, spurs innovation and makes it easier for governments to regulate the market.