According to blockchain analytics firm Chainalysis, there are several big differences in the amount of crypto growth among the top three countries after adoption in Central and South Asia.
Central and South Asia and Oceania (CSAO) is the fourth largest crypto market studied by the company, which received a value of USD between July 2020 and June 2021 – 14% of the global transaction value in that period. CSAO also includes the top three countries in Chainalysis’s Global Crypto Adoption Index: Vietnam, India, and Pakistan.
“The differences between the largest markets of Central and South Asia may reflect the fact that these countries are at different stages of the development of the cryptocurrency market,” Chainalysis said in a recent report.
While the three countries all have a high level of base crypto adoption, they differ in two key aspects:
- The markets of India and Vietnam are much larger than those of Pakistan.
- India has a much larger share of activity on decentralized financial platforms (DeFi): 59% compared to 47% for Vietnam and 33% for Pakistan. That is, all three grew “significantly” last year, with Pakistan taking the lead and growing 711%, followed by India 641%.
- They are very different in terms of raw transaction value. Looking at the breakdown of transaction value by currency, Ethereum (ETH) and coiled Ethereum (WETH) account for a larger share of India’s activity than Vietnam or Pakistan – not surprising since these currencies are often used for DeFi. Among the three, Bitcoin (BTC) accounts for the largest share in Pakistan.
In markets such as Vietnam and Pakistan, the report further explained, many people look to crypto primarily in search of quick returns for speculative trading with a variety of investments that can be made on centralized services and traditional P2P platforms.
According to Binh Nguyen, the senior program manager for finance and fintech crypto hub Coordinator at RMIT Vietnam, there is “a technologically savvy contingent” of the crypto community in Vietnam “interested in changing the future of money and building innovative projects,” including DeFi, but many crypto investors do not have a high level of financial literacy or experience in risk management.
“Low financial literacy is a driver of excessive risk-taking and can bring happy financial rewards to crypto investors during a bull market. Many sophisticated investors may wait five to ten years and miss something,”he was quoted as saying.
In India, a market where the crypto community has managed to grow and attract outside investment”we are seeing more development and use of innovative projects such as DeFi protocols,” Chainalysis said.
42% Of transactions sent from India-based addresses are large institutional transfers over USD 10m crypto – this is compared to 29% for Vietnam and 28% for Pakistan. “These figures suggest that India’s cryptocurrency investors are part of larger, more sophisticated organizations,” it said.
Joel John, principal at India-based crypto investment firm LedgerPrime, told Chainalysis that investing in stocks in India is “a long, painful process” that requires numerous documents and several days, but “investing in crypto takes less than an hour.” By his estimate, there are four times as many crypto investors as stock investors in the country.
Krishna Sriram, Managing Director at Quantstamp, stressed the relevance of the development of India’s crypto-focused media and influencer ecosystem, explaining that many Indian developers, fund analysts and independent freelancers working for foreign employers have started paying for crypto. Many of them choose ETH or USDC and receive payments through centralized or decentralized exchanges (DEXES).
“Centralized exchanges are becoming stricter and more difficult for people in certain jurisdictions. DeFi does not recognize where they come from or whether it has a relationship with their bank,”Sriram said.
The top five DeFi platforms in CSAO by total crypto transaction volume (July 2020-June 2021) are Uniswap, Instadapp, dYdX, Compound and Curve Finance, followed by AAVE.