Analysis of Top Blue Ocean Market: The Flourishing Development of India's Cryptocurrency Industry Post Ban Lift

In April this year, the Supreme Court of India overturned the central bank's ban on cryptocurrency trading, injecting a dose of optimism into the Indian market. This world's second-most populous country with 1.339 billion people has once again sparked the cryptocurrency community's expectations for the market. However, India has always been one of the fastest-growing markets. OKEx has insights on the rapid growth of trading volume in the country, and this article will extract its key points.

The driving forces behind the development of the cryptocurrency market in India can mainly be attributed to three key factors: immigration, finance, and government policies. OKEx predicts that between 2020 and 2022, the Indian cryptocurrency trading market share will significantly increase globally, and the competition between domestic exchanges and international exchanges will intensify gradually.

Crypto Adoption Driven by High Remittance Demand

Several factors are fueling the rapid growth of the cryptocurrency market in India, including:

• • As a medium for cross-border remittances
  • As a medium to convert into stable fiat currencies
  • Relaxed policies aiding cryptocurrency market development

India is the world's largest remittance-receiving country with over 17 million immigrants in 2019, closely followed by Mexico and China. Therefore, Indian immigrants across the globe have a strong demand for cross-border remittances, leading to consistently high amounts of remittances received by India over the years.

In a world where remittance costs are uneven, high fees in many African countries have raised the global average to $7.4. While India's average of $6.82 is below this, the high demand for remittances meant that India's remittance fees still amounted to $5.67 billion in 2019.

Bitcoin Adoption Driven by Fiat Depreciation and Immigrant Remittances

Considering the average cross-border remittance costs mentioned above, using Bitcoin or other cryptocurrencies as a transfer medium could indeed save Indian immigrants substantial fees. With further policy openness, this could potentially increase the adoption of digital currencies in India.

Moreover, the Indian Rupee (INR) experiences significant volatility, especially during the COVID-19 pandemic where the INR to USD exchange rate dropped, leading to continued depreciation. To convert into more stable currencies like USD amidst this devaluation, cryptocurrencies have become an option.

Due to strict foreign exchange regulations, converting INR directly into USD can be cumbersome. Therefore, some individuals choose to convert INR into Bitcoin and then into USD through peer-to-peer trading platforms like LocalBitcoins and Paxful, especially during the COVID-19 period, the volume of INR to Bitcoin transactions on Paxful platform saw a significant increase, reaching new highs.

Blockchain Ecosystem in India

In April 2018, the Reserve Bank of India issued a directive prohibiting financial institutions from providing services to cryptocurrency businesses, leading to banks closing exchange accounts and dealing a blow to the crypto industry. However, in March this year, the Supreme Court of India overturned the central bank's trading ban, stating that the central bank had no authority to prohibit cryptocurrencies and that the ban lacked thorough research on crypto assets.

Following the lifting of the ban, many exchanges reconnected with banks, some closed exchanges reopened, and new exchanges are set to launch. Binance subsequently announced a $50 million fund investment in the Indian exchange WazirX. The image below shows the existing exchanges in India.

While there is a noticeable surge in Bitcoin trading volume in India, as traditional finance moves towards a more liberal and equitable market, exchanging USD may no longer be challenging for Indian citizens. Consequently, Bitcoin may become less significant to them. Based on current use cases, it does not imply that Indian users hold Bitcoin or other cryptocurrencies for the long term.