India cryptocurrency market is set to gain significant market share this year
According to a report published last week by Coinpaprika and Okex, the Indian cryptocurrency market is set to gain significant market share this year. One of the main drivers of the soaring Indian cryptocurrency industry comes from the volatile legal environment, the depreciation of the Rupee.
The Indian cryptocurrency market is flourishing
India is one of the fastest-growing cryptocurrency markets, gradually catching up with the growth of cryptocurrencies.
The report stated:
“India is one of the fastest-growing crypto markets, increasing catching up on cryptocurrency development. We attribute the driving force of the Indian cryptocurrency market development to three significant factors, gathering 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.”
Three main factors represent the rapid growth of the Indian cryptocurrency industry. The first factor is the cross-border remittance. The number of overseas remittances of Indian immigrants is the highest in the world over the years, citing the fact that India had more than 17 million immigrants in 2019. Because cross-border transactions often have high fees, Coinpaprika and Okex believe that using Bitcoin or other cryptocurrencies as a means of a cross-border payment. Indians can save a large number of remittance fees.
The report stated:
“Cryptocurrency as a cross-border payment medium will make a big difference in the Indian market. Due to great remittance demand, it will drive the prosperity of digital currency growth in India for a long time.”
The second factor is the instability of the Indian Rupee and the strong demand of Indians for the US dollar. The value of the Indian Rupee is not stable, especially in the COVID-19 epidemic; the exchange rate between the Rupee and the USD continues to rise, causing the currency to depreciate continuously with the continuous depreciation of the Rupee, influential Indians need to convert their Rupee into a more stable currency.
The report stated:
“However, due to strict foreign exchange regulations, it is complicated to convert Rupee directly to US dollars. Therefore, most Indians will choose to convert Rupee to bitcoin and then to US dollars through C2C trading platforms such as Localbitcoins and Paxful.”
Many Rupees are exchanged with Bitcoin via chat groups, such as Whatsapp, Telegram, and Facebook then converted into US dollars. To maintain the value of their assets, cryptocurrencies are being used as a means to convert the Rupee into a more stable fiat in India.
The third factor is the regulatory environment for cryptocurrencies in India. In March, the country’s supreme court removed banking restrictions imposed by the central bank. This has profoundly affected the local cryptocurrency industry. The Reserve Bank of India (RBI) recently confirmed when responding to the Right to Information (RTI) request that there are no longer any banking bans on exchanges, companies, or cryptocurrency traders.
The report continues:
“After the policy was loosened, the increase in trading volume was not only recorded in local exchanges, but also the major global exchanges.”
According to Similarweb, a website analytics data provider, traffic on major crypto exchanges from India increased many-fold in Q1 2020.
The report further highlights:
“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, several other cryptocurrency exchanges have reported massive growth in transaction volume and new users. The local exchanges Wazirx and Unocoin experienced a 10-fold increase in volume as Indians explored cryptocurrency trading during the nationwide extended lock. Moreover, new crypto exchanges are launching in India, global exchanges are expanding in the country, and more venture capitalists are investing in Indian crypto startups.
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