India’s cryptocurrency adoption continues to soar, even amid intensifying regulatory efforts, according to blockchain research firm Chainalysis. In its 2024 “Global Adoption Index,” Chainalysis reveals that India now ranks as the top country globally for cryptocurrency adoption.
In a recent blog post, Chainalysis highlighted that India’s position as a dominant player in the cryptocurrency market remains unchanged despite evolving regulatory landscapes and tax policies.
“Last year, we noted that India maintained its status as a leading global cryptocurrency market, despite navigating complex regulatory and tax frameworks,” the post stated.
India’s cryptocurrency investors face a capital gains tax of 30% and a 1% tax on all transactions, commonly referred to as the Tax Deducted at Source (TDS). These stringent regulations may have prompted some investors to seek international exchanges with more favorable conditions. However, this has not deterred the overall growth of crypto adoption in the country.
In December, India’s Financial Intelligence Unit (FIU) issued notices to nine offshore exchanges, including major players like Binance and Kraken, for non-compliance with the country’s anti-money laundering (AML) laws. The FIU requested that the Ministry of Electronics and Information Technology block access to these exchanges for Indian users.
Despite these regulatory actions, Chainalysis noted that many users continued to access these platforms, especially if they had previously downloaded the apps. Additionally, new downloads remained available for certain platforms.
A study by the Esya Center, an Indian think tank, found that the impact of the FIU’s efforts to block access to these platforms was short-lived, with minimal long-term effect on the digital asset market.
Vikram Rangala, Executive Director of ZebPay, a leading Indian cryptocurrency exchange, expressed optimism about the future of the country’s crypto sector. He noted that although the FIU order created challenges, it is likely to be temporary. Rangala emphasized the importance of regulatory clarity in fostering a sustainable crypto ecosystem.
“We are seeing that offshore exchanges will soon be integrated into this emerging ecosystem. Previously, high taxes drove investors from Indian exchanges to international platforms. I’m hopeful that with clearer regulations, we will also see a more favorable tax environment that encourages innovation and facilitates the integration of crypto and Web3 technologies into the broader economy,” Rangala said.
Chainalysis pointed out that India’s regulatory framework is gradually becoming more defined due to ongoing dialogue between industry leaders and regulators. This interaction is paving the way for continued growth in the sector.
The insights on India’s crypto landscape form part of Chainalysis’ broader 2024 Geography of Cryptocurrency Report, which also highlights rising trends in other regions. For example, Singapore is seeing increased use of stablecoins for payments, with transactions reaching a record high of nearly $1 billion in the second quarter of 2024.
India’s resilience in the face of regulatory pressures, combined with increasing collaboration between the cryptocurrency industry and policymakers, positions the country as a critical player in the global digital currency landscape.
