Following crypto tax and regulatory uncertainty, India slumped two slots to the fourth place in a list of 20 countries with the highest cryptocurrency adoption rate, which was dominated by emerging markets, according to crypto analysis platform, Chainalysis.
The American blockchain analysis firm endeavors to measure the grassroots adoption of cryptocurrency. Therefore, instead of ranking countries on raw cryptocurrency volumes, this ranking highlights the activity in the crypto market from non-institutional and non professional investors.
In 2021, investments into digital assets caught young Indian professionals by a storm, catapulting India to the second position in Chainalysis’ Global Crypto Adoption Index. In 2020, India dropped to fourth place, although it is still in the top 20 countries worldwide when it comes to crypto adoption.
BusinessLine had previously reported that as legal and regulatory pressures afflict Indian exchanges, crypto volumes have been dropping even further. Institutional investors have fled to global exchanges and risk-averse Indians ceased personal investments into crypto as well.
TDS on cryptos
The average spot trade volumes of top Indian exchanges shrank in July after the Government of India imposed a 1 per cent TDS on the sale of cryptocurrency assets. Volumes continued to decline in August against the backdrop of the WazirIX controversy, which has put 10 additional exchanges under the lens of the Enforcement Directorate. According to the data shared by Crebaco, a cryptocurrency research company, WazirIX, ZebPay and Bitbns have been showing a decline in trading volumes at 18 per cent, 20 per cent and 42 per cent, respectively, between July and August.
This comes even as global crypto markets have started to show initial signs of recovery. Professional and non-professional investors have shifted crypto trading to foreign exchanges, according to media reports in August. Experts note that volumes for Indian exchanges will continue to decline as long as the Indian government does not remove the tax burdens on the trade of cryptocurrencies and regulates the exchanges operating in India.
Meanwhile, the Reserve Bank of India has shown scant interest in regulating digital assets, a sentiment that has likely deepened due to the recent troubles with the ED.