As the bear market continues to drag down global crypto adoption, Asia remains a leader in digital asset usage. That’s according to an annual report by blockchain analytics firm Chainalysis, which found six of the 10 countries with the highest crypto adoption are in Central and Southern Asia and Oceania, including India, Vietnam, the Philippines, and Indonesia.
With the crypto industry struggling to regain its footing in the wake of November’s FTX collapse, Chainalysis’s findings reflect a growing thesis: Crypto is a global story. The report found that countries classified by the World Bank as “lower middle income” recovered the fastest in terms of adoption, or total crypto transaction volume weighted for purchasing power.
The majority are spread across Asia, a region already defined by diverse crypto use cases. India, for example, topped the rankings for both services occurring on centralized exchanges like Binance, as well as crypto activity across decentralized finance (“DeFi”) protocols, which can vary from exchanges to lending apps.
While Chainalysis found that centralized exchanges still dominate web traffic across Asia, the use cases differ across countries. The Philippines has long been a leading adopter, owing in large part to the popularity of crypto games. The play-to-earn game Axie Infinity first gained prominence in the Philippines in 2021 before values plummeted, with many users relying on the title as a source of income. According to Chainalysis, nearly 20% of the Philippines’ crypto-related web traffic goes to gaming and gambling platforms.
Adoption in Pakistan, by contrast, is driven by wealth preservation in the face of currency devaluation, according to Chainalysis, even though cryptocurrency trading is formally banned in the country. Because many transactions happen through informal peer-to-peer activity, Chainalysis’s findings may not capture the full extent of the market, although Pakistan still ranks eighth in the overall index.
The global adoption report, now in its fourth year, measures transaction volumes based on web traffic patterns, combining the results with qualitative interviews with local experts and operators. It weights the findings by purchasing power parity to ensure that the index reflects activity rather than just volume.
The U.S. still ranked fourth in the index, up from fifth last year, with activity driven by both centralized exchanges and DeFi. Right behind was Ukraine, whose government has turned to crypto for donations in its war against Russia.
Despite the diverse activity across the world, Chainalysis cautioned that adoption has taken a nosedive since the first quarter of 2022. The hardest-hit segments have been low-income countries like Ethiopia, Sudan, and Yemen, as well as upper-middle-income countries like Argentina, China, and Russia and high-income countries like the United Kingdom and Saudi Arabia.