Efforts to regulate the cryptocurrency sector have not hurt India’s adoption of the digital currency.

In fact, the country now leads the world on the 2024 “Global Adoption Index” from blockchain research firm Chainalysis. 

“Last year, we noted that India remained a top global cryptocurrency market, amid evolving regulatory and tax environments,” the company said in a recent blog post. 

“The country’s comparatively high crypto capital gains tax (at 30%) and 1% tax on all transactions — also known as a tax deducted at source (TDS) — may have drawn some Indian investors to explore international exchanges without such stringent regulatory requirements. Regardless, these developments didn’t seem to hinder crypto’s overall growth in the country, and it is the same this year.”

Last December, India’s Financial Intelligence Unit (FIU) notified nine offshore exchanges — among them giants like Binance and Kraken — that they weren’t in compliance with the country’s India’s anti-money laundering laws, and asked the Ministry of Electronics and Information Technology to block their URLs for India-based customers. 

“However, contacts in the region explained to us that users were still able to access these exchanges if they had previously downloaded the apps and that certain apps were still accessible for new downloads,” Chainalysis said. 

“Interestingly, the Indian think tank Esya Center analyzed the impact of blocking of the URLs on the digital asset market and found it to be short-lived.”

The report also quotes Vikram Rangala, executive director of ZebPay, an India-based cryptocurrency exchange and wallet provider, who said that he did not think the FIU order would last long, and expressed hope that the country’s crypto sector would benefit from added regulatory clarity. 

“Now we’re seeing that offshore exchanges will soon be brought into this emerging ecosystem. Earlier, we had a flight of investors away from Indian exchanges to global exchanges because of high taxes,” Rangala said. “I hope that, with regulatory clarity, we’ll also get a more workable tax arrangement that promotes innovation, and brings all aspects of crypto and Web3 into the economy in a sustainable way.”

Chainalysis argued that India’s path to crypto adoption has become clearer, because of ongoing engagement between the industry and regulators. 

The company’s data on India is part of its 2024 Geography of Cryptocurrency Report, and comes on the heels of new findings from Chainalysis showing Singapore’s increasing use of stablecoins for payments. 

Payments with the digital assets during the second quarter reached a record high of nearly $1 billion in the city state, the research found.