Chainalysis: India Jumps to Become the World's Second Largest Cryptocurrency Market! What are the reasons behind the adoption of cryptocurrencies in Central and South Asia?

The data analysis company Chainalysis recently found in a study that the cryptocurrency market in Central, Southern Asia, and Oceania (CSAO) region is active. When measured by raw transaction volume, CSAO has become the third largest market globally, with India even ranking as the second largest country in terms of transaction volume.

Chainalysis Cryptocurrency Data Analysis in Central and South Asia, and Oceania

The chart below shows the percentage of cryptocurrency trading volume worldwide, with CASO accounting for approximately 20%, ranking third after North America and Western Europe.

When looking at the trading volume of each country in the region, India received about $268.9 billion in cryptocurrency assets over the past year, leading significantly over other countries. Following India are Vietnam and Thailand, with Singapore, known for its financial openness, ranking 7th.

However, using trading volume as the sole indicator may not reflect the true situation. Therefore, Chainalysis calculated the Global Crypto Adoption Index based on population and purchasing power. Among the top 10 countries, 6 are in the CASO region, including India at 1, Vietnam at 3, the Philippines at 6, Indonesia at 7, Pakistan at 8, and Thailand at 10.

Institutional trading volume in this region is also increasing gradually, with transactions over $1 million accounting for 68.8% of the total volume in the past year, showing an 11.2% increase compared to the same period the year before.

Among all cryptocurrency services, DeFi platform services generate the largest share of trading volume in the CASO region, approximately 55.8%, followed by centralized exchanges.

However, in terms of platform web traffic, countries in the CASO region still favor centralized exchanges.

Philippines Prefers Cryptocurrency Gaming and Gambling Platforms

After reviewing the data overview, Chainalysis specifically highlights three countries to analyze their adoption status, starting with the Philippines.

Chainalysis found that a significant portion of cryptocurrency network traffic in the Philippines goes to gaming and gambling platforms, accounting for about 19.9%. This is largely attributed to the craze surrounding Axie Infinity in the Philippines, as data shows that the growth in cryptocurrency trading volume in the Philippines aligns with Axie's growth in the summer of 2021.

Although Axie Infinity is no longer as popular in the current cryptocurrency industry, the success of this game has indeed laid the foundation for further cryptocurrency adoption in the Philippines.

Pakistan's High Adoption Rate Stemming from Inflation Issues

In the CASO region, Pakistan stands out as a unique country. Despite the government's ban on cryptocurrency trading, the country ranks 8th in the global cryptocurrency adoption ranking.

Chainalysis attributes this phenomenon to "necessity," as five years ago, Pakistan had an inflation rate as high as 10.6%, which has now skyrocketed to 29.4%. This high inflation severely impacts people's savings and investment returns, leading them to hold cryptocurrencies, especially stablecoins, as a hedge.

India Emerges as the World's Second-Largest Cryptocurrency Market

In terms of raw trading volume, India has surpassed several major countries to become the world's second-largest cryptocurrency market, second only to the United States.

Furthermore, when further divided by cryptocurrency platform types, India ranks in the top ten in adoption rate across all platforms.

Despite imposing a 30% tax on cryptocurrencies in July last year, cryptocurrency usage in India has not decreased. Instead, more people are moving away from domestic compliant exchanges to international exchanges that are not subject to tax restrictions.

From web traffic data, it is evident that since July last year, traffic from India to international exchanges has been steadily increasing.

Cryptocurrencies Adapt to Local Economic Conditions

From the phenomena observed in the above countries, it is evident that countries in the CASO region have diverse and unique economic needs. Whether they aim to speculate on new assets, earn extra income through games, or combat inflation by leveraging the high liquidity and stability of stablecoins, cryptocurrencies are finding their footing in these countries and serving their purposes.