7.3 percent of India population owns cryptocurrencies in 2021 UNCTAD Report

According to the report 15 of 20 economies were developed countries as well as emerging markets whose have a population that has digital currencies by 2021.

The report also noted that the cryptocurrency market grew global by 2300% between July 2019 to June 2021,, with the greatest growth in emerging countries.

One of the main motives for the rapid growth of cryptocurrency was due to users are looking for a low-cost and quick method of sending money

7.3 percent of the population of India was using digital currencies or cryptocurrency in 2021, according to the UNCTAD’s report.

As per the UNCTAD’s “All that glitters isn’t gold: The cost of letting cryptocurrencies go not regulated” report, 15 of 20 countries were emerging markets and developing nations with populations that have digital currencies by 2021.

Of these, Ukraine’s population was the most percentage of ownership of digital currencies with 12.7 percent, then followed by Russia with 11.9 percent, Venezuela with 10.3%, Singapore with 9.4 % and Kenya 8.5 percent.

The report stated of the fact that the ecosystem for cryptocurrency has grown worldwide by 2300% during the period July 2019 to June 2021, primarily in the developing world.

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Cryptocurrency: A Cheaper and Faster Alternative to Traditional Money

According to the report there were 450 cryptocurrency exchanges operating around the world in 2021. In May of last year the crypto exchanges recorded $500 Bn daily , that is the equivalent of the highest daily volume of trading on Nasdaq, the American Nasdaq stock exchange. Nasdaq in January 2022.

The main reason for the increasing use of cryptocurrency by countries in the developing world are the fact that at first, cryptocurrencies were considered to be a fast and inexpensive alternative to transfer money.

“During the epidemic the already expensive costs of traditional remittance services increased even more during lockdown times due to disruptions in the process,” the report said.

In addition they are owned by middle-class citizens in the developing world, especially those who are facing the effects of rising inflation and currency depreciation. In these nations the idea of investing in cryptocurrency was seen as a means to protect savings for households.

Risques Associated With Cryptocurrencies

As per the research cryptocurrency can bring dangers and issues for developing nations. First of all, the act of trading and holding cryptocurrency can lead to the risk of financial instability in emerging markets and in developing countries.

If the price of cryptos drops dramatically in the near future, then financial authorities (of emerging countries) must take action to bring financial stability back. Particularly in developing countries the rise of cryptocurrencies could also open an opportunity for illegal financial transactions.

Second, cryptocurrency decreases the value of capital controls in the developing countries.

“The use of cryptocurrencies erodes control of capital, which is an essential instrument for developing nations that can help to limit the accumulation of financial and macroeconomic vulnerabilities and to enhance policy flexibility,” the report stated.

If the developing nations don’t keep a close eye on cryptocurrencies, they are able to transform into a new mode of payment, and even substitute for the national currencies. In addition stabilitycoins are a greater risks to countries in developing countries which haven’t been able to meet the demand for reserve currency.

Conscient of the dangers, as of Nov. 2021, 41 nations have either requested their banks and financial institutions to stop dealing in crypto currencies or ban crypto-exchanges offering cryptocurrency trading services to individuals as well as organizations.

In addition, nine of the developing nations namely Algeria Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia have already banned cryptocurrency within their borders. However certain countries like India have started levying tax on the capital gains generated by cryptocurrencies.

Presently, India is imposing a 30% tax on the income that is earned through transfers of digital assets, especially cryptos, 1percent TDS applied to cryptocurrency transactions, and losses during trading digital assets cannot be offset against any other type of income, and giving digital assets to another is tax-deductible to the recipient.

According to the report the developing nations must take rigorous measures to stop the expansion of the cryptocurrency market in their region.

The report suggests that emerging countries should require crypto-exchanges as well as digital wallets to require registration with the relevant authorities. They should implement policies and practices that reduce the value of trading in cryptocurrency. appealing, such as charging entry fees to organizations and individuals to join crypto-exchanges or digital wallets, and taxing cryptocurrency trading.

It also stated that the emerging nations should limit cryptocurrency exchanges and other digital wallets to avoid advertising on public spaces as well as on social media platforms.

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“This new kind of virtual, often concealed, advertisements calls for policymakers to broaden their regulatory responsibilities to include traditional media. This is a crucial need for consumer protection in countries that have inadequate financial literacy, since even an insignificant exposure to cryptocurrency could cause substantial loss,” the report said.

It was also recommended that the developing nations create a system of public payments like the central bank digital currency for users of crypto.

“In light of the technological and regulatory complex nature that central banks have with digital currency and the need for urgently providing secure, reliable and affordable payment solutions authorities should also consider alternatives, including speedy payment systems for retail customers,” the report added.

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