A recent report highlights that India’s growing demand for cryptocurrencies is driven by the need for lower remittance fees and a more stable currency to store value.
The cryptocurrency spot and derivative exchange OKEx in collaboration with Coinpaprika studied the Indian cryptocurrency markets and estimated that the global share of cryptocurrency transactions in India will increase significantly in the next two years.
Moving to a less expensive payment system
There are over 17 million Indians working beyond the borders who sent more than $80 billion back home in 2018. They paid as much as $5.67 billion as transaction fees to intermediaries involved in the transaction settlement.
The high transaction fees are forcing Indians to look for alternative ways to send money back to their country. The report states that, with loosening restrictions on cryptocurrency usage in India, India might soon become the next Mexico, where the cryptocurrency exchange Bitso has already captured more than 2% of the United States-to-Mexico remittance market.
Since the Supreme Court ruling striking down the Reserve Bank of India’s banking ban on cryptocurrencies, there has been increased crypto trading activity in the country. OKEx visits from India saw an increase of 545.56% and newly registered users from India rose by 4,100% during the first quarter of 2020.
Cryptos as a medium to steer clear of foreign exchange regulations
Another major issue Indians face is the unstable price of Indian rupee against the U.S. Dollar, which has fallen by approximately 7% since the early days of the coronavirus pandemic. Indians are also finding it difficult to exchange Indian rupees to a more stable currency due to complex foreign exchange regulations.
This is another reason why Indians are moving to Bitcoin (BTC) and other cryptocurrencies to exchange their funds. However, the report said, they mostly use cryptos as a way to switch to a more stable fiat currency.