According to a report by the United Nations Conference on Trade and Development (UNCTAD), around 7.3 percent of Indians owned some form of digital currency in 2021. This highlights that over the last couple of years, digital assets have surged to popularity among the Indian populace amounting to over 100 million crypto holders.
The report also states that 15 of the top 20 nations in terms of digital currency ownership were developing countries, with India ranking 7th, one position behind the US. Pakistan also made it to the list coming in 15th while the UK and Australia occupied the 13th and 20th positions respectively. Topping the list was Ukraine, with 12.7 percent of its population holding crypto assets.
According to the report, the global adoption of cryptocurrencies spiked exponentially during the COVID-19 pandemic.
As remittance costs spiralled during the lockdown and various disruptions made it difficult to send fiat currencies overseas, people turned to cryptocurrencies to facilitate cross-border payments. Besides wild price appreciation, these digital assets also offer a quick and affordable channel for remittance.
The COVID-19 pandemic also triggered rising inflation levels. The report stated that middle-class families in developing countries used digital assets as a hedge against the depreciating value of fiat currencies. This was another major reason for the sharp uptick in digital currency ownership.
As per the UNCTAD report, the crypto ecosystem ballooned by over 2,300 percent between September 2019 and June 2021. However, Indian investors have grown sceptical of these digital assets, with regulatory bodies coming down hard on cryptocurrencies.
While buying and selling crypto assets is not illegal, profits from the same are being treated as winnings from gambling, and the income from the transfer of virtual assets is being taxed at 30 percent. On top of this, there is also one percent TDS deduction on all transactions.
Earlier this year, crypto exchanges in the country were also forced to halt UPI payments due to uncertainty from regulatory bodies. This made it harder to acquire digital assets. Such uncertainties are also driving crypto firms to set up bases elsewhere, with several projects looking to countries like Dubai as a hub for digital asset operations.
(Edited by : Sangam Singh)
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