India’s crypto market set to gain significant market shares this year. According to a report published by crypto research platform Coinpaprika and global crypto exchange Okex, 3 attributes exist as the driving forces of the cryptocurrency market development.
According to the report, the first driving force is cross-border remittances. “The amount of remittances by Indian immigrants has been the highest in the world over the years,” the report details, citing that the country had more than 17 million immigrants in 2019. The firm believes that seeing as cross-border transactions traditionally carry high fees, “Using bitcoin or other cryptocurrencies as a cross-border payment medium, Indians can save a large number of remittance fees.”
“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 firm added.
The next factor is concerned with the instability of the Indian rupee and Indians’ strong demand for U.S. dollars. The report outlines “The value of Indian rupee is not stable, especially during the covid-19 epidemic … The exchange rate between rupee and USD continued to rise, causing the former to enter constant depreciation … with the constant depreciation of the rupee, the Indians have a strong need to convert their rupee into a more stable fiat currency.”
The report goes on to elaborate that “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.”
The third and final deciding factor s the regulatory environment for cryptocurrency in India. In March, the country’s supreme court quashed the banking restriction imposed by the central bank which has had profound effects on the local crypto industry. The Reserve Bank of India (RBI) recently confirmed in a reply to a Right to Information (RTI) request that there is no longer any banking ban on crypto exchanges, companies, or traders.
Coinpaprika and Okex’s reports details that “After the policy was loosened, the increase in trading volume was not only reflected in local exchanges, but also the major global exchanges.”
The firms research is based on the Indian crypto sector, major players, the challenges they face, and the rapid development of the country’s crypto ecosystem. They go on to share that “India is one of the fastest-growing crypto markets, gradually catching up on cryptocurrency development.”