Stablecoins Demand in India: INRGrid Stable Report

Introduction

The Rise of Stablecoins in India

India’s cryptocurrency and blockchain ecosystem has expanded rapidly over the past few years. According to recent reports, over 35 million Indians are now investing in digital assets, including Bitcoin, Ethereum, and Cardano, as well as participating in the growing real-world asset tokenization and NFT markets. The Indian government's stance on cryptocurrency remains cautious, with regulators concerned about the risks of dollarization and capital outflows. However, the rise of peer-to-peer transactions using stablecoin peaked during 2024.

India has stayed in the top spot for cryptocurrency adoption worldwide for the second year in a row, even with strict regulations and high taxes, according to a report from blockchain analytics company Chainalysis.

Market Insights from Top Indian Exchanges

Data from the top exchanges in India provide valuable insights into the demand for stablecoins and Cardano (ADA). Here's an overview of ADA’s performance on popular Indian crypto exchanges:

CoinSwitch

CoinSwitch is one of the largest cryptocurrency exchanges in India, with a wide user base. In recent months, ADA has seen increased trading volumes on the platform, reflecting its growing popularity. Trading Pairs: ADA/USDT, ADA/INR, and ADA/BTC are among the popular pairs on WazirX. Trading Volume: Data shows that trading volume for ADA has increased by over 30% in the past year, making it one of the top-traded altcoins on the platform. User Base: WazirX has seen a steady increase in ADA holders, with a notable rise in transactions among retail investors seeking long-term investment opportunities in the altcoin.

$ADA Data Points from CoinSwitch

– Total number of ADA holders on CoinSwitch: 214,345 users

– ⁠Current ADA holdings on CoinSwitch: 14,393,258 ADA

– ADA volume traded on CoinSwitch to the date: Total volume: $174,320,477 (Data points as of August 21, 2024)

The exchange holds its $ADA in 6 different Cardano wallets, and here are the top two wallet addresses and details:

CoinSwitch exchange has also provided its total crypto holdings in INR currency:

CoinDCX

CoinDCX is another prominent exchange in India that supports a wide range of cryptocurrencies. As of recent data, ADA has been performing well on this exchange:

Trading Volume: CoinDCX has observed a 40% increase in ADA trading volumes compared to the previous quarter. The growth is attributed to the increasing awareness about ADA’s capabilities, especially in the DeFi space.

Market Sentiment: CoinDCX reports strong bullish sentiment for ADA, particularly after major upgrades such as the Alonzo upgrade, which introduced smart contracts.

New Investors: ADA has attracted a significant portion of the newer investor base, with millennials and young professionals being the most active demographic in trading ADA.

Data Points from CoinDCX

– Total number of ADA holders on CoinDCX: 517,814

– Current ADA holdings on CoinDCX: 23,920,000 ADA

– ADA volume traded on CoinDCX to the date: $1,058,619,105 (Data as of August 21, 2024)

Stablecoin Markets in India

Stablecoins play an important role in the cryptocurrency world, with their total value reaching $165 billion by August 2024. This growth is mainly because more people and businesses are using stablecoins, and governments are working on new rules for them. Several things have helped stablecoins grow. For example, they are used more in regular financial services, and Central Bank Digital Currencies (CBDCs) could be a more popular use case. Big companies like Visa and PayPal now use stablecoins in their payment systems, which shows that stablecoins are becoming more accepted in mainstream finance.

Here’s a total supply chart of stablecoins to date to understand the inevitable acceptance:

Stablecoins in India: Demand and Skepticism

Stablecoins and Central Bank Digital Currencies (CBDCs) are poised to play an increasingly significant role in the future of digital finance. While stablecoins are issued by private entities, their underlying technology offers a transparent, decentralized alternative to traditional banking. This could resonate with a global shift toward digital and decentralized finance, providing users with more control over their assets and enhancing financial inclusion, especially in underserved regions.

Meanwhile, CBDC is primarily Web2 merchant-focused, and the retail version is yet to show some traction. On the other hand, INR-backed stablecoin will cater to the Web3 companies and users. India has 400 Web3 companies, from decentralized finance (DeFi) and blockchain infrastructure to tokens (including non-fungible tokens, or NFTs), the Metaverse, decentralized autonomous organizations (DAOs), and custody wallets, Indian firms are leading the charge in pioneering new applications and services built on Web3 technologies. This diverse adoption not only showcases the adaptability of Web3 but also emphasizes its potential to drive both economic growth and societal progress in digital India.

Money Market Experts' Points of View on Stablecoins

In India, where the digital divide remains a challenge in semi-urban and rural areas, the introduction of stablecoin aligned with India’s CBDC could bridge gaps in financial access. With internet penetration and smartphone usage steadily increasing, these digital currencies have the potential to reach vast segments of the population that are currently underserved by traditional banking infrastructure. Moreover, the rise of financial literacy programs and investment in digital infrastructure could significantly accelerate adoption in the coming years. Stablecoins have already gained considerable traction, with over 200 listed as of 2024, alongside traditional finance. Their popularity is growing as they provide an alternative to volatile cryptocurrencies, offering a more stable store of value. Stablecoins, especially those pegged to fiat currencies or backed by significant reserves, have demonstrated a strong ability to maintain price stability and enhance liquidity. Their increasing adoption in global markets indicates their role in driving the evolution of the crypto ecosystem.

S.C. Garg, Former Financial Secretary, Government of India

Stablecoins, like USDT, highlight the lack of transparency regarding their reserves. Stablecoin issuers should have proof of reserve; if not transparent, it will collapse. Private cryptocurrency is a wrong product. Central banks could develop their digital currencies to facilitate international payments, potentially transforming existing financial systems. There is a necessity to update legal frameworks to accommodate innovations such as smart contracts and to ensure that crypto assets are recognized as high-risk investments.

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Prasanna Lohar, Ex-Head – Innovation & Technical Architect at DCB Bank

CBDCs, backed by central banks, offer another layer of credibility and stability, making them an attractive solution for countries like India, where the regulatory environment prefers more centralized control over financial systems. The introduction of the e-Rupee (CBDC) initiative could complement the use of stablecoins, offering users both the safety of a government-backed currency and the advantages of digital, on-chain transactions.

INRC: The INR-backed Stablecoin for India

What is INRC?

INRC offers Indian businesses, consumers, and DeFi participants a stable alternative to existing global stablecoins while also promoting the use of the Indian Rupee in the digital economy.

Features and Benefits of INRC

• Price Stability: INRC’s value is pegged 1:1 to the Indian Rupee, making it a stable medium for digital transactions.
• Collateralization: INRC is fully backed by reserves of INR and equivalent assets, ensuring full transparency and accountability.
• Ease of Use: Accessible to any Indian with internet access, INRC allows users to interact with digital assets without needing to swap their INR for dollar-pegged stablecoins.
• Interoperability: INRC is designed to work seamlessly across multiple blockchain networks and platforms, enhancing its usability across various DeFi and Web3 ecosystems.

INRC and the Indian CBDC

Bridging CeFi and DeFi with INRC

Addressing Dollarization and Strengthening the INR

Market Demand for INRC

Growth of Cryptocurrency and Digital Assets in India

India’s crypto market has seen exponential growth in recent years. In 2021, India’s crypto transactions exceeded $80 billion, and by 2024, the market is expected to grow to over $10 billion. This growth is fueled by a tech-savvy population and increasing acceptance of digital assets as a store of value, with many Indians looking for ways to diversify their investments. As of May 2022, over three crore Indians were holding digital assets worth $5.4 billion, and this number continues to grow. The fully compliant INRC stablecoin will engage existing Web3 users and attract mainstream financial institutions and investors. The ultimate goal is to introduce DeFi to 750M internet users in India.

Market Segments for the INRC Ecosystem

The INRC market is vast, covering a range of segments from individual retail investors to large businesses, Web3 startups, and decentralized finance (DeFi) platforms. Key players in the ecosystem include:

• Exchanges: Both centralized (CEX) and decentralized (DEX) exchanges that list INRC pairs with various digital assets.
• Web3 Platforms: Startups and companies integrating INRC as a payment and settlement solution for global transactions.

The INRGrid team also received positive insights from Richard Tang, CEO of the world’s largest crypto exchange, Binance. He shared his positive thoughts on regional stablecoins and collaboration with CBDCs. Both digital instruments have the potential to facilitate robust DeFi/CeFi solutions. Important to note that Binance owns 70% market share in the Indian market as per the daily traded volume.

• Market Makers: Institutions and individuals using INRC for liquidity provision and arbitrage across digital asset markets.

INRC Use Cases and Applications

Web3 Platforms and Decentralized Finance (DeFi)

The Role of INRC in Payments, Remittances, and Merchant Services

INRC can also be used for fast and low-cost cross-border payments, remittances, and settlements between businesses and consumers. By offering lightning-fast transaction speeds and low fees, INRC enhances the efficiency of global trade and payments, making it an attractive option for merchants and consumers alike.

INRC Liquidity and Exchange Networks

Decentralized and Centralized Exchanges Support

INRC is supported across major decentralized and centralized exchanges, allowing users to trade INR-backed tokens with other cryptocurrencies. This liquidity is essential for fostering the growth of the INRC ecosystem and encouraging adoption by both retail and institutional investors.

Market Makers and Trading Opportunities

Market makers play a crucial role in ensuring liquidity for INRC on exchanges. By providing buy and sell orders, market makers help maintain the stability of INRC prices and facilitate the seamless exchange of INRC with other digital assets.

INRC Wallets and Acquisition Process

How to Acquire and Redeem INRC

Acquiring INRC is a simple process, requiring users to sign up for an account, complete the Know Your Customer (KYC) verification, and deposit INR into their INRC wallet. Once verified, users can transfer INR into the stablecoin or redeem it back to INR at a 1:1 ratio.

Wallet Functionality and Security

INRC wallets offer a secure and user-friendly interface for managing assets. With multi-factor authentication, encrypted private keys, and robust security protocols, INRC wallets ensure the safety of users' digital assets.

Regulatory Considerations for INRC

Compliance with Indian Law

Conclusion

While the country has a deep-rooted preference for cash and Unified Payment Interface (UPI), the evolving regulatory landscape and growing interest in digital assets signal that the shift towards digital currencies—both stablecoins and CBDCs—is gaining momentum. The integration of these digital currencies into the existing financial system could serve as a bridge to wider adoption, allowing India to embrace the future of finance while maintaining the security and trust that its population values.