It’s official – India has the highest number of cryptocurrency owners in the world. Over 100 million Indians have invested in cryptocurrencies, according to a new report by broker discovery and comparison platform BrokerChooser.
This development should come as no surprise to keen observers of India’s burgeoning crypto market, which has been on the growth trajectory for some time now. Moreover, India ranked second among 154 countries in terms of adoption, according to the 2021 Global Crypto Adoption Index by Chainalysis. US-based research platform Finder further indicated that India was among the world’s top five countries with the greatest crypto adoption.
Cryptocurrencies are not yet officially recognised by the Government of India. At the time of writing, a draft cryptocurrency bill is in the works. Yet, legal ambiguity has not deterred millions of curious and tech-savvy young Indians who have identified crypto as the next big disruption in tech.
Key market drivers
India’s cryptocurrency surge can be attributed to several factors. As is the case globally, the market is dominated by young investors with an appetite for risk and innovation. With an average age of just 29 years, India is home to one of the world’s youngest populations. Its population is also largely a digitally native one. Young Indians have grown up in a world increasingly driven by technology and navigate the digital world with ease, much like their counterparts elsewhere.
India also has a large technologically skilled workforce owing to its robust technical education infrastructure. The availability of tech talent ensures faster innovation through new technologies. Further, India has a strong culture of entrepreneurship and innovation. The tremendous strides taken by entrepreneurs in the past decade are a testimony to their thirst for achievement.
Cryptocurrency’s potential to solve critical challenges will ensure steady adoption long after the pandemic is over
The COVID-19 pandemic has been another critical driver. When the threat of contagion forced the world indoors, technology helped us stay connected. The past year and a half saw overwhelming digital adoption, of which cryptocurrencies were a notable part. Globally, cryptocurrency adoption grew by a whopping 880% between July 2020 and June 2021, according to Chainalysis. The growth was reflected in India. Between April 2020 and May 2021, investments escalated from USD 923 million to USD 6.6 billion – impressive growth in just one year.
Cryptocurrency’s potential to solve critical challenges will ensure steady adoption long after the pandemic is over. For instance, the absence of traditional banking infrastructure in parts of India has created a need for a digital infrastructure that can enable seamless and more accessible banking. As potential currencies of the future, and given their instant and frictionless nature, cryptocurrencies can play a significant role in enabling this digital infrastructure.
Interest in cryptocurrencies may be growing, but they are yet to reach the mainstream. As with many novel technologies, this has much to do with the myths surrounding them. For instance, a common misunderstanding is that cryptocurrencies make it easier to facilitate illegal activities. In reality, cash makes it easier for criminals since it is not easily traceable. Digital transactions leave digital breadcrumbs – data that allows law enforcement to trace them.
Similarly, there have been concerns about the supposed environmental impact of cryptocurrency mining, particularly with Bitcoin. However, Bitcoin mining consumes half the energy used by traditional banking and gold industries, according to a report by Galaxy Digital released in May this year.
With the right cryptocurrency regulations, India can also attract the capital needed to produce the ‘Google’ of digital assets and become a global hub for crypto talent
Besides such myths, steps must be taken to familiarise users with digital assets. There is a significant age disparity in terms of cryptocurrency adoption. Currently, it is led by young investors. Older investors prefer the more traditional assets. Encouraging them to become more comfortable with new technology could be the key to broader adoption. As successful use cases grow, natural demand could increase their desire to learn about cryptocurrencies.
Finally, a regulatory framework for cryptocurrencies that values and encourages innovation can allow India to emerge as a leading player in the development of Web 3.0. History shows that regulations that favour new and promising technologies enable countries to gain a strong competitive advantage.
In the United States, the Clinton Administration introduced the Telecommunications Act of 1996, which allowed private entities to enter the Internet business. It was a landmark step that eventually gave rise to the world’s biggest tech companies.
Today, the Internet economy accounts for 12% of the US GDP. On the other hand, European tech entrepreneurs found themselves weighed down by stringent bureaucracy, and many left their homes to set up shop in Silicon Valley. With the right cryptocurrency regulations, India can also attract the capital needed to produce the ‘Google’ of digital assets and become a global hub for crypto talent.
Cryptocurrencies are set to trigger a sea change over the next decade. Now, with the highest number of crypto owners in the world and a rapidly growing user base, India is poised to emerge as a key player in this digital asset market.
Guest author Kristin Boggiano is President and Co-Founder of CrossTower, a crypto exchange with capital market capabilities that empowers smart money to push the limits of what is possible. Boggiano is a business-focused legal executive and strategic advisor with deep expertise analyzing the rapidly evolving regulatory landscape related to decentralized finance and digital assets. Any opinions expressed in this article are strictly that of the author.
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