India is on the verge of surpassing China as the leader in the Asian peer-to-peer (P2P) cryptocurrency trading volume, according to the latest finding from Arcane Research.
Generally, frontier markets have seen strong growth in the cryptocurrency P2P space as evidenced in both lower competition in those markets from centralized exchanges and the use in relation to remittances, it says.
The P2P market has witnessed three geographical expansion waves from being used in the developed economies to get access to Bitcoin to more participants from emerging markets joining P2P platforms particularly during the speculative mania of 2017.
“Now, we see most of the growth in frontier markets. This can both be linked to weaker competition from centralized exchanges and to the usage of P2P platforms to conduct remittances,” the report says, citing that the P2P volume of Asia-Pacific peaked during the 2017/18 bull market and is currently 66% lower.
New blog post: Asian P2P volume climbing in 2020
China has long been the largest contributor to the Asian P2P volume, but is about to be surpassed by India, who has seen a strong and stable growth throughout 2020.
Read more: https://t.co/2NbRsYwD1E
— Arcane Research (@ArcaneResearch) November 5, 2020
It’s China vs India in Asia
The global P2P volume peaked in 2017 (above $150 million) during the Bitcoin bull run – though now stabilized around a weekly volume of $80 million. China’s dominance of the P2P volume saw a sharp spike as President Xi Jinping forbade buying Bitcoin with Chinese Yuan which led many to P2P exchanges.
As at 2017, China absolutely dominated the regional volume, accounting for more than two thirds of the total volume, the report states. The Chinese restriction, coupled with a fall in activity on a leading P2P market, Local Bitcoins, after it introduced KYC requirements for its users, caused significant drops in Bitcoin price and volume in China.
According to its data, India and China now hold 33% of the total P2P volume in Asia Pacific while the remaining third is distributed among the rest of the Asian countries, with the Philippines and Thailand leading.
“China has long been the largest contributor to the Asian P2P volume, but is about to be surpassed by India, who has seen a strong and stable growth throughout 2020,” it says.
India’s upper hand over China
As the top recipient of remittances, according to the World Bank, with Non-Resident Indians overseas sending $83 billion worth of remittances in 2019, equaling 2.9% of the total Indian GDP
, to their relatives, the report says India already surpasses China by $5 billion in remittance volume, giving the country an advantage in the crypto P2P race.
Other cited factors that might have driven adoption in India include Indians’ distrust for their financial system particularly since the demonetization of the high value currency notes and the Supreme Court of India’s overturn of banking restrictions for crypto exchanges this year.
“Since the lifting of the banking restrictions, the weekly P2P volume in India has seen an 87% boost and is attracting major investment from across the world,” says Ray Youssef, whose Paxful P2P platform has grown in the last five years after focusing extensively on specific regions while LocalBitcoins lost volume after turning KYC-compliant. “While the world is still torn between adopting cryptocurrency or not, India is taking the trend in stride and is ready to lead the Asian market moving forward.”
For Sunny Ray, president of India’s first cryptocurrency exchange, Unocoin, the potential for widespread crypto adoption in India is massive. “Many in India remain underserved by traditional payment systems, increasing bitcoin’s attractiveness as an alternative currency,” he says following a US$5 million Series A funding round led by Tim Draper’s Draper Associates in October.
Youssef suggests that instead of heralding crypto as the devil in disguise, the Indian financial system could introduce it as an alternative for the existing payment and remittance options without interfering with the strength of the Indian currency or disrupting the country’s foreign exchange management.