India is one of the fastest growing cryptocurrency markets in the world, says a new report that attributes the demand for the digital asset to three significant factors—remittances by immigrants, the sliding rupee and gradual loosening of government policies.
The India Crypto Market Research Report has been published by the world’s largest cryptocurrency spot and derivatives exchange OKEx, in collaboration with Coinpaparika, a leading digital currency research platform.
The report says India’s overseas population fuels a strong demand for cross-border remittances, one of the highest in the world. But with the remittance fees being quite high, such as USD 5.67 billion in 2019 as per World Bank data, cryptocurrency could emerge as one of the low-cost alternatives for the Indians abroad.
“Using Bitcoin or other cryptocurrencies, such as XRP, as a cross-border payment medium, Indians can save a large number of remittance fees,” the report says.
Moreover, with the devaluation in Indian Rupee particularly in these times of pandemic, cryptocurrency could be a vehicle to convert the country’s national currency into other more stable fiat currencies.
The report says the value of the Indian Rupee is not stable, especially during Covid-19. The exchange rate between Rupee and USD continued to rise, causing the former to enter constant depreciation. “However, India has a great demand for the US dollar, such as online shopping on Amazon, Netflix subscriptions, etc. Whether it is due to Rupee preservation or consumer demand, with the constant depreciation of the rupee, the Indians have a strong need to convert their Rupee into a more stable fiat currency,” says the report.
“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,” it says.
In addition to these, the recent loosening of government policies—including the lifting of the 2018 banking ban on cyrpto by the country’s top judiciary—can fuel massive growth in the digital currency development in India, according to the report.
The report mentions the 4 March ruling where the Supreme Court of India struck off the Reserve Bank of India’s banking ban against cryptocurrency, which is explains has led to India’s overall cryptocurrency market becoming prosperous again, especially reflected in the exchanges’ trading volume.
“From the perspective of local exchanges in India, taking CoinDCX and WazirX as an example, we can see that from 4 March 4, trading volume has been rising,” says the report.