With just under 20% of global activity, CSAO has become the third-largest crypto market in the world measured in raw transaction volume, compared with others like North America and Central, Northern & Western Europe (CNWE).
The region dominated the Chainalysis Global Crypto Adoption Index where six of the top 10 countries are located here, namely: India (1), Vietnam (3), the Philippines (6), Indonesia (7), Pakistan (8), and Thailand (10). Along with this, institutional adoption has also picked up in the region. Compared with 57.6% in the preceding time period, the figure now stands at 68.8% of the total transaction volume coming in transfers valued at $1million or more.
Over the last year, DeFi (decentralised finance) also took on a heightened role in CSAO, accounting for an estimated 55.8% of regional transaction volume between July 2022 and June 2023. In the previous year-long period, this was just 35.2%.
The report also shed light on the varied factors driving adoption in different CSAO countries. It means that there are different rates of usage for different types of crypto services in these countries. This was illustrated on a graph that demarcated the breakdown of web traffic to different types of cryptocurrency platforms for the top CSAO countries on the adoption index.
While centralised exchanges took up the majority of web traffic in all of the countries (around 50% to 70%), countries like Philippines and Vietnam showed a huge share of crypto-related web traffic going to gaming and gambling platforms (19.9% and 10.8%, respectively).
P2P exchanges, which are commonly used in emerging markets or in countries with stricter capital controls, were seen being used in abundance in countries like Pakistan. Here, many people seem to have turned to crypto in the face of challenging economic conditions which has led to high inflation and currency devaluation in the nation.
Chainalysis also observed how India has continued to remain the biggest CSAO crypto market despite regulatory woes and difficulties around tax laws. The country taxes crypto activity at a much higher rate than others around the world. It levies a 30% tax on gains (which is higher than the country’s tax rate on other investments such as equities) and a 1% tax on all transactions, also known as a tax deducted at source (TDS).
Despite this challenging environment, India leads the world in grassroots adoption as measured by the Global Crypto Adoption Index. More impressively, it has also beaten many wealthier nations in becoming the second-largest crypto market in the world by raw estimated transaction volume.
The report ended proclaiming the CSAO region as the future of crypto, leading the way in grassroots adoption.
According to Chainalysis, this is because these countries have wide-ranging, unique economic needs where different crypto platforms and assets have arisen to meet them in each case. The report adds: “In the Philippines, where many want to speculate on new assets, make extra cash, and connect digitally with others, play-to-earn games were able to gain an enormous foothold. The games act as an entry point into the wider digital asset economy…. In Pakistan, where the economic situation is more dire — consider Pakistan’s $5,680 PPP per capita versus the Philippines’ $9,210 on top of the currency devaluation we described — stablecoins are providing economic relief.”
In saying this, the report stated that regardless of a country’s circumstances, cryptocurrency has a valuable role to play. In countries like India, there has been an enormous demand for cryptocurrency despite the regulatory hurdles. As long as that demand is there, crypto will always have a place in the world’s second-largest country, said Chainalysis.