India’s cryptocurrency market is set to gain significant market share this year, according to an industry report. The regulatory environment, the instability of the rupee, and remittances are key drivers that will send the Indian crypto industry soaring.
Indian Crypto Sector Flourishing
The Indian cryptocurrency market is poised to gain considerable global market share starting this year, according to a report published last week by Coinpaprika and Okex. The former is a cryptocurrency research platform while the latter a global crypto exchange. They analyzed the Indian crypto sector, major players, the challenges they face, and the rapid development of the country’s crypto ecosystem.
“India is one of the fastest-growing crypto markets, gradually catching up on cryptocurrency development,” the two companies wrote, elaborating:
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.
Key Factors Behind Rapid Growth of Indian Crypto Sector
The report attributes the rapid growth of the Indian crypto industry to three key factors. The first 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. Since cross-border transactions traditionally carry high fees, Coinpaprika and Okex believe that “Using bitcoin or other cryptocurrencies as a cross-border payment medium, Indians can save a large number of remittance fees,” adding:
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 next factor concerns 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 describes, noting:
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…