India Leads the Way in Grassroots Cryptocurrency Adoption
India has emerged as the global leader in grassroots cryptocurrency adoption, surpassing other nations, according to the 2023 Global Crypto Adoption Index recently unveiled in the ‘Geography of Cryptocurrency’ report by the blockchain analytics platform, Chainalysis. This index shifts the focus to everyday individuals embracing cryptocurrencies, rather than solely relying on transaction volumes. Notably, India outshone countries known for high levels of crypto trading and mining, securing the second position in the rankings of countries with the highest estimated crypto value received between July 2022 and June 2023. India accumulated an impressive USD 250 billion in crypto value over the past year, second only to the United States, which recorded approximately USD 1 trillion in crypto value during the same period.
Despite the challenging tax regime and regulatory environment in the country, India has witnessed remarkable crypto adoption rates. India currently imposes a 30% tax on cryptocurrency gains and withholds 1% at the source.
The report highlighted a significant trend where while every exchange operating within India is required to collect Tax Deducted at Source (TDS) taxes from Indian users, numerous international exchanges have struggled to implement this effectively. As a result, a growing number of Indian users have turned to foreign crypto exchanges, diverting them from platforms primarily targeting the Indian market. This shift has led to a substantial increase in web traffic from India to foreign crypto exchanges following the implementation of TDS last year, resulting in challenges for Indian exchanges.
Indian crypto exchanges have encountered legal challenges, exemplified by the case of WazirX, which had its funds frozen and faced investigation by the Enforcement Directorate (ED) last year. The ED took action against WazirX, stating that it had assisted accused Instant Loan APP Companies in laundering fraud money via the purchase and transfer of virtual crypto assets.
Indian crypto traders demonstrate a preference for investing in high-value assets like Bitcoin and Ether, but they also display enthusiasm for meme-based assets such as Dogecoin and the Shiba Inu token.
Despite calls from industry stakeholders for more comprehensive cryptocurrency regulations to foster entrepreneurial growth and attract investors, the Indian government maintains a cautious stance toward the cryptocurrency market. Over the past year, crypto traders have urged the government to reduce the 30% tax on gains.