India tops global cryptocurrency adoption for second year in a row, despite regulatory hurdles and high taxes

India ranked high in the use of centralized exchanges and decentralized financial assets between June 2023 and July 2024.

A report by Blockchain Analytics found that while the growth in cryptocurrency adoption last year was mainly driven by middle- and low-income countries, this year has seen increased activity across all income brackets, with high-income countries seeing a decline since the start of 2024.

Since 2018, India has maintained a strict stance on cryptocurrencies, and in December 2023, the Financial Intelligence Unit (FIU) issued show-cause orders to nine offshore exchanges for failing to comply with local regulations.

While investors face strict regulations and high turnover taxes, India remains the global leader in cryptocurrency adoption for the second year in a row, according to a report by blockchain analytics firm Chainalysis.

The report pointed out that while the growth in cryptocurrency adoption last year was mainly driven by lower-middle-income countries, this year has seen increased activity across all income groups, with high-income countries seeing a decline since the start of 2024.

As per the report, India ranked high in the adoption of centralized exchanges and decentralized financial assets between June 2023 and July 2024. The report tracks adoption across four subcategories across 151 countries.

India has maintained a strict stance on cryptocurrencies since 2018. In December 2023, the Financial Intelligence Unit (FIU) issued notices seeking evidence to nine offshore exchanges for non-compliance with local regulations.

In June, Binance, the world’s largest cryptocurrency exchange, was fined INR 18.82 Cr ($2.25 million) just a month after registering with India’s Financial Intelligence Unit (FIU) to resume operations. KuCoin, another cryptocurrency exchange, registered with the FIU in March but received a smaller fine of INR 34.5 lakh. Interestingly, seven of the top 20 countries in Chainalysis’ Global Adoption Index were from Central and South Asia, including Indonesia, Vietnam, and the Philippines.

The report added that countries with lower purchasing power saw significant decentralized transactions below $10,000. In Indonesia, where cryptocurrencies are banned as a payment method but allowed as an investment, digital asset trading reached $157.1 billion in inflows in the year to July.

This comes as Inc42 reported earlier today that the Financial Intelligence Unit (FIU) of the Ministry of Finance will review the petitions seven offshore crypto platforms is trying to resume operations in India.

Exchanges like Bitfinex, MEXC Global, Kraken, Huobi, Gate.io, Bittrex, and Bitstamp will be filing their cases later this week. These platforms were earlier banned for violating the Prevention of Money Laundering Act (PMLA) but can resume operations after settling an estimated INR 2,900 Cr under GST.