According to an industry report published last week by Coinpaprika and Okex, India is set to increase the crypto market share this year significantly. It also denoted the key drivers that will make the Indian crypto market booming. The driving factors include instability of the rupee, regulatory environment, and remittances. After analyzing the Indian crypto sector, Coinpaprika and Okex highlighted the significant challenges they face and focus on the rapid development of the country’s crypto ecosystem.
The report stated that “India is one of the fastest-growing crypto markets, gradually catching up on cryptocurrency development.” Coinpaprika and Okex also elaborated that, “We attribute the driving force of the Indian cryptocurrency market development to three significant factors, namely immigrants, finance, and government policies. It is expected that the global market share of crypto transactions in the Indian market will increase significantly in 2020-2022.”
Governing Factor Behind Significant Growth
The report illustrated the three key factors responsible for significant growth in the crypto space.
First- Cross-Border Remittances
The report details that the amount of remittances by Indian immigrants has been the highest in the world over the years, citing that the country had around 17 million immigrants in the year 2019.
Coinpaprika and Okex stated that “Using bitcoin or other cryptocurrencies as a cross-border payment medium, Indians can save a large number of remittance fees.” This is because cross-border transactions traditionally carry high fees. The two companies believe that “Cryptocurrency as a cross-border payment medium will make a big difference in the Indian market.”
Due to significant cross-border payment demands, “it will drive the prosperity of digital currency growth in India for a long time,” the report added.
Second- Constant Depreciation of Indian Rupee
The report then highlighted the second governing factor behind the rise of the Indian crypto market., i.e., constant depreciation of Indian rupee. “The value of Indian rupee is not stable, especially amid COVID-19 epidemic. The exchange rate between rupee and USD continued to rise, causing the Indian currency to enter into depreciation,” the report added.
The report explained how Indians would convert their currency into US dollars, explaining, “Due to strict foreign exchange regulations, it is complicated to convert Indian rupee directly to US dollars. Therefore, the majority of Indians will choose to convert rupee to bitcoin and then to US dollars through C2C trading platforms.”
Third- Regulatory Environment
The regulatory environment is the third factor for cryptocurrencies in India. In March, the country’s supreme court removed banking restrictions imposed by the central bank, which had strong effects on the local crypto industry. The RBI (Reserve Bank of India) also confirmed that there is no longer any banking ban on crypto exchanges, companies, or traders.
The report explained the role of such policies on global trade illustrating, “After the policy was loosened, the increase in trading volume was reflected in local exchanges and the major global exchanges.” It added further that, “Okex’s visits from India saw the highest increase, reaching 545.56%. According to Okex, newly registered users from India rose 4100% during the same period.”
In addition to Okex, two prominent local exchanges, Wazirx and Unocoin, also reported that they had experienced around 10X volume growth as Indians explored crypto trading during the lockdown. Apparently, new crypto exchanges are launching and global exchanges are expanding in India, , and more venture capitalists are investing in Indian crypto startups.