India Maintains Global Leadership in Crypto Adoption Despite Legal Challenges

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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September 11, 2024 07:59 EDT

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India remains a global leader in grassroots crypto adoption, despite regulatory uncertainties and evolving public views on digital currencies, according to Chainalysis’ 2024 Global Crypto Adoption Index released Wednesday.

The index evaluates 154 countries using five metrics, including crypto transactions on centralized exchanges, DeFi platforms and peer-to-peer trading. It aims to identify where individuals are investing the most in crypto.

India continues to lead in crypto adoption, a position held since Chainalysis’ 2023 report. This year’s index also places Nigeria, Indonesia, the US, Vietnam, Ukraine and Russia among the top 10, highlighting the strong crypto engagement in the Central and Southern Asia and Oceania (CSAO) region.

Image Source: Chainalysis

India’s Crypto Resilience Shines Amid Shifting Tax Policies and Platform Bans

Chainalysis highlighted India’s resilience in maintaining its top position in crypto adoption, despite shifting tax policies and regulatory challenges, including last year’s ban on foreign crypto platforms.

The blockchain firm noted that India’s 30% crypto capital gains tax and 1% tax deducted at source (TDS) on transactions may be driving investors to international exchanges, where such strict tax rules do not apply.

“Regardless, these developments didn’t seem to hinder crypto’s overall growth in the country, and it is the same this year,” it said.

India Blocked Offshore Crypto Exchanges, but Users Bypass Restrictions

In Dec. 2023, India’s Financial Intelligence Unit (FIU) issued notices to nine offshore cryptocurrency exchanges, including Binance, HTX (formerly Huobi), and Kraken, for non-compliance with anti-money laundering regulations.

The FIU then instructed the Ministry of Electronics and Information Technology to block these platforms’ URLs for Indian users. However, Chainalysis found that users could still access these exchanges via previously downloaded apps, with some apps still available for new downloads.

An analysis by the Esya Center indicated that the impact of these URL blockings on the crypto market was minor and short-lived.

Vikram Rangala, Executive Director at ZebPay, suggested that these regulatory measures may not last and said he hoped for clearer regulations to support India’s growing crypto and Web3 community.

Additionally, the FIU is now reviewing registration applications from four foreign crypto exchanges, with two expected to gain approval to operate in India by the end of the 2025 financial year.