Cryptocurrency adoption soars but US and China fall back

By Raffaele Redi

Global cryptocurrency adoption soared 880% in the past year boosted by emerging markets

A chart showing global cryptocurrency adoption                                 
Vietnam, India, Pakistan and Ukraine precede US and China among the top 20 countries. Photo: Chainalysis
                                

Global cryptocurrency adoption soared more than 880% in the last year boosted by emerging market growth, according to new research.

However, peer-to-peer (P2P) cryptocurrency transactions in the US and China shrank in volume, the 2021 Global Crypto Adoption Index by Chainalysis shows.

“A growing transaction volume for centralised services and the explosive growth of DeFi [decentralised finance] are driving cryptocurrency usage in the developed world and in countries that already had substantial adoption, while P2P platforms are driving new adoption in emerging markets,” explain Chainalysis researchers.

The 2021 Global Crypto Adoption Index Top 20
Top 20 countries in 2021 Global Crypto Adoption Index. Photo: Chainalysis

2021 Global Crypto Adoption Index ranking

Vietnam, India, Pakistan and Ukraine are above the US and China among the top 20 countries ranked according to retail value received and P2P exchange trade volume, according to the index released on Wednesday.

The research stressed how in emerging markets many turn to cryptocurrency to preserve their savings in the face of currency devaluation, to send and receive money and carry out business transactions. In contrast, adoption in North America, Western Europe and East Asia over the last year has been powered largely by institutional investment.

P2P platforms fuel adoption in emerging markets

Many residents in emerging markets use P2P cryptocurrency exchanges because they don’t have access to centralised exchanges, live in countries suffering currency devaluation, or face limits on international transfers, according to the research.

“Several countries in emerging markets, including Kenya, Nigeria, Vietnam, and Venezuela rank high in the index in large part because they have huge transaction volumes on peer-to-peer platforms when adjusted for PPP per capita and internet-using population,” researchers explain.

People in central and southern Asia, Latin America and Africa send more web traffic to P2P platforms than regions whose countries tend to have larger economies, such as Western Europe and East Asia. However, most of the traffic consists of retail-sized payments of less than $10,000 worth of cryptocurrency.

China and the US dip in rankings

However, P2P volumes have fallen in China and the US compared with worldwide volumes, according to the findings.

“This activity may reflect increasing professionalisation and institutionalisation of cryptocurrency trading in the United States, and in China’s case may be related to ongoing government crackdowns on cryptocurrency trading,” explain researchers.

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