Crypto adoption has always been high in Eastern Europe, according to the survey.
Over the past year, the level of cryptocurrency adoption by individual investors has spiked by over 880%, according to crypto analytics firm Chainalysis. But amid the peaking interest for cryptocurrencies, new leaders have emerged.
In its 2021 Global Crypto Adoption Index, Chainalysis examined cryptocurrency adoption by ordinary people. The primary focus was on individual use cases for transactions and savings, rather than for speculation and trading. Using factors such as peer-to-peer exchange trading volume and value received, the report revealed that global cryptocurrency adoption by retail investors grew by 881% in the past 12 months. Meanwhile, adoption has grown by over 2,300% since the third quarter of 2019.
Ukraine, which occupied the first position in the 2020 edition, has now lost the top spot to Vietnam. The European nation enjoyed the largest volume of transactions from retail investors in 2020, eventually making it to the list of top 10 countries with the highest earning on Bitcoin last year.
Commenting on the growing interest in cryptocurrencies and the commitment of the government towards the growth of the sector, Deputy Minister of IT Development Oleksandr Bornyakov said:
“One of the priority goals of our ministry is to provide all the necessary conditions for the activity and development of crypto companies in Ukraine. I am convinced that the creation of a qualitative legal framework for work in the market of virtual assets will strengthen Ukraine's position as a jurisdiction on the international map."
As earlier mentioned, Ukraine has lost the top spot, falling to the fourth position behind Vietnam, India and Pakistan. But despite its drop in ranking, Ukraine is still ahead of power players like the United States and China.
New Heavyweights Have Emerged
Chainalysis explained that the drivers for cryptocurrency adoption vary around the world. While adoption in regions like North America and Western Europe has been fueled mainly by institutional players, “in emerging markets, many turn to cryptocurrency to preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions,” Chainalysis said in the report.
Asia is leading the world in cryptocurrency adoption, with Vietnam, India and Pakistan occupying the top three positions in crypto users. Other Asian countries such as China, Thailand and the Philippines are not far behind.
The United States and China dropped to eighth (down from sixth) and thirteenth (down from fourth) place, respectively. Chainalysis asserts that the drop in retail adoption was because P2P trading volumes declined in both countries. In the case of China, the government’s continuous crackdown on cryptocurrency mining and trading activities caused the decline.
Similar to Ukraine, Russia also appears to have fallen from glory. The country dropped to 18th place, down from its second place position last year. Although its P2P exchange trade volume climbed to 122 (second only to China), its on-chain value received and on-chain retail value received currently stand at 6 and 8, respectively. It is also worth mentioning that Russian regulators have launched an initiative to track cryptocurrency transactions.
In general, the rise in crypto adoption in emerging markets like Vietnam, Kenya and Nigeria has been powered by P2P platforms. Chainalysis wrote:
“Several countries in emerging markets, including Kenya, Nigeria, Vietnam, and Venezuela rank high on our index in large part because they have huge transaction volumes on peer-to-peer (P2P) platforms when adjusted for PPP per capita and internet-using population. Our interviews with experts in these countries revealed that many residents use P2P cryptocurrency exchanges as their primary on-ramp into cryptocurrency, often because they don’t have access to centralized exchanges.”
Chainalysis concluded its report by questioning how new and emerging models could disrupt existing behavior. It noted that while P2P platforms are driving adoption in emerging markets, centralized services and decentralized finance are fueling crypto usage in developed countries. However, this could change over the next twelve months as new models emerge.
