Cryptocurrency adoption is experiencing a significant surge in South and Central Asia, driven by the emergence of real-world use cases, according to blockchain intelligence firm Chainalysis.
During a recent webinar discussing the Chainalysis 2023 Geography of Cryptocurrency report, Chengyi Ong, head of APAC policy at Chainalysis, mentioned the growing use of digital assets in countries like India and Vietnam, where crypto adoption is outpacing other regions.
She emphasized that the adoption trend in the region is primarily fueled by tangible use cases such as blockchain-based gaming, remittances, and protection against currency volatility.
“Where fundamental drivers are strong and where digital assets have real-world value to offer, adoption will follow in some way, shape or form.”
The webinar, led by Kim Grauer, research director at Chainalysis, noted the popularity of cricket-themed non-fungible tokens (NFTs) in India and the success of the Axie Infinity blockchain game developed by Vietnamese studio Sky Mavis.
These examples illustrate widely-used commercial applications that have attracted users to the world of crypto.
Grauer explained that these innovative use cases bring in a new cohort of users who become native to crypto, driving further adoption.
Crypto Adoption Soars in LMI Countries
Chainalysis’ 2023 Geography of Cryptocurrency report revealed that global crypto adoption has decreased significantly since its peak in Q2 2021.
However, the report highlighted an exception for low-to-middle-income (LMI) countries, which includes nations in the Asia Pacific region such as Pakistan and India.
LMIs, accounting for 40% of the world’s population, have now returned to pre-FTX levels of adoption.
The collapse of the FTX cryptocurrency exchange in November 2022 had a profound impact on the industry, resulting in a $2 trillion market loss and reduced adoption worldwide.
High-income nations responded with increased regulatory scrutiny, further dampening adoption.
The report by Chainalysis sees the increased adoption in LMIs as extremely promising, particularly as it coincides with growing institutional interest in crypto in high-income countries.
“We could see a combination of bottom-up and top-down cryptocurrency adoption in the near future if these trends hold, as digital assets fulfill the unique needs of participants in both segments,” the report argues.
Chainalysis, founded in 2014 by Michael Gronager, a former executive at Kraken cryptocurrency exchange, is a New York-based blockchain analysis firm.
The company is backed by major players in finance, including investment banks Blackstone and Bank of New York Mellon, and was valued at $8.6 billion in its most recent funding round in 2022.
However, the firm recently underwent two rounds of layoffs, including a reduction of around 150 staff members in early October.
Chainalysis measures crypto adoption by considering total crypto activity in a country relative to its purchasing power, providing a comparative metric that accounts for national income levels and population size.
According to this metric, India ranked the highest, followed by Nigeria, with eight Asia Pacific countries making up the top 20 in the index of countries.