The instability of the rupee combined with high remittance fees is driving digital currency adoption in India, according to a new report.
The report from exchange OKEx in partnership with Coinpaprika found an increasing share of global digital currency business in India, projecting significant growth relative to other countries over the coming two years.
The problem of remittance fees is particularly acute in the country, with 17 million Indian employees working overseas and remitting money home. Of the $80 billion remitted from overseas workers in 2018, some $5.67 billion in fees were incurred.
According to the report, increasing liberalization of digital currency rules in India could set the country on a similar path to Mexico, where digital exchange Bitso has grown to account for 2% of U.S.-Mexico remittance.
The growth in digital currency uptake has accelerated since the Supreme Court ruled against the Reserve Bank of India’s ban on banks serving crypto businesses. OKEx has reported a 545.56% increase in traffic from India, with sign-ups during the first quarter of the year up 4,100%.
The shift to crypto also coincides with instability in the rupee, which has lost 7% of its value against the dollar since the beginning of the coronavirus crisis.
Complex rules for exchanging foreign currency in India have made it difficult for those looking to transfer rupees into more stable fiat currencies, which the report said had also been a factor in driving more people to turn to digital currencies.
While the report found digital currency was currently being used as a vehicle for ultimately transferring funds to alternative fiat currencies, it suggests more Indians could turn to digital currency directly as the market continues to mature.
The move follows similar trends seen in other countries with unstable fiat currencies, and from those with large overseas remittance industries.
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