Chainalysis Global Crypto Index Review
Spotlight on the Asian Market
TL;DR
Chainalysis' 2023 Global Crypto Index is weighted toward countries with lower incomes, which tends to result in more favorable scores for developing countries. Nonetheless, the market growth and potential of Central and Southern Asia and Oceania (CSAO) is undeniable.
CSAO countries are characterized by 1) young populations, 2) aspirations for upward mobility, and 3) proactive crypto policies by regulators. Their younger generations and government support are driving the revitalization of their crypto markets.
While East Asian countries did not make the top 10, they remain important due to their strong economies and market stability relative to the CSAO market.
2023 Global Crypto Adoption Index Summary
On September 12, Chainalysis released a report titled "The 2023 Global Crypto Adoption Index: Central & Southern Asia Are Leading the Way in Grassroots Crypto Adoption". The report provides a comprehensive and detailed analysis of the global Crypto Adoption Index, providing a clear picture of the current state of the global cryptocurrency market. This provides an overview of global market conditions and trends.
Notably, the report found that six of the top 10 countries are located in the Central and Southern Asia and Oceania (CSAO) region. This insight is often cited by companies and experts in the CSAO region, and it has drawn attention to the region's fast-growing companies.
Summary of main contents
Recovery driven by lower middle income (LMI) countries: LMI countries, categorized by the World Bank based on gross national income (GNI), are making significant progress in the crypto space. Most of the top countries in the index fall into this category, suggesting that weighting by country's income level has had a significant impact on the index's results.
Asia-Pacific dominance: Six of the top 10 countries are in the CSAO region, proving that it is the most active and attractive region for the Web3 market. These countries include India, Nigeria, and Vietnam, which are rapidly adopting and expanding cryptocurrency usage.
Focusing on these key points, this report will provide comments on the main findings of the report published by Chainalysis. With this information, readers will be able to gain a deeper understanding of the Web3 market in the CSAO region.
Impact of average income by country
First, the ranking methodology of this analysis cannot avoid the influence of income. The evaluation centers on five metrics for cryptocurrency trading, including CEX, P2P, and DeFi, and is weighted by income, resulting in higher scores for low- and middle-income countries. Notably, India (1), Vietnam (3), Philippines (6), Indonesia (7), Pakistan (8), and Thailand (10) have nominal GDP per capita of $4,000 or less, which indicates a large correction. However, this fact that the CSAO market is the third largest cryptocurrency market cannot be ignored.
This may be attributed to the fact that cryptocurrency provides utility to low-income families. CSAO countries are often constrained in foreign exchange transactions due to the unstable value of their domestic currencies, so they tend to utilize cryptocurrencies as a means of remittances. Additionally, the value of tokens earned through web3 services such as Axie Infinity can exceed average incomes in some cases, making this region a key player in expanding the practical use of cryptocurrency.
CSAO Regional Advancements
While there are differences between the CSAO countries in the top 10, they share common characteristics: 1) a young median age, 2) a desire for upward mobility, and 3) proactive state-led crypto policies. With the exception of Thailand, the median age in all five countries is less than 35 years old, and this younger generation's desire for upward mobility is having a significant impact on the cryptocurrency market. Countries are also showing a willingness to set clear regulations for their crypto markets.
India: India's cryptocurrency market continues to grow. A young and technologically savvy population with a median age of 29 is driving the growth of this market. India also has the largest total cryptocurrency trading volume among CSAO countries, with $268.9 billion in crypto assets traded between July 2022 and July 2023. The Indian government has also maintained a flexible policy toward cryptocurrencies, and while it has announced plans to tighten rules around money laundering, it has remained flexible in its implementation.
Vietnam: Vietnam is supported by a fast-growing economy, favorable industrial policies, and an extensive IT developer ecosystem. It is a country with a high crypto adoption rate and a vibrant crypto market, whilst bringing innovation in the trading, GameFi, and DeFi sectors. Vietnam's growth is driven by a younger generation, with a median age of 32, who are quick to understand and adapt to IT and new businesses.
Philippines: The Philippines is being touted as a major player in the future of the cryptocurrency market. The country has been quick to embrace digital currencies and blockchain technology, applying it to various sectors of the economy thanks to strong government support. Its young and technologically savvy population is expanding its use of cryptocurrencies through games like Axie Infinity. The Philippine government is planning to introduce a central bank digital currency to provide financial services to a wider population, which is expected to further boost the adoption and use of cryptocurrencies.
Another Asian market to watch
According to the report released by Chainalysis, not a single Northeast Asian country is included in the top 10. The absence of South Korea was particularly unexpected, as the market estimates that the country accounts for more than 20% of global cryptocurrency transactions. CSAO countries, on the other hand, have been climbing steadily on the list.
However, even if Northeast Asian countries do not rank high on the global index, the region's cryptocurrency market still has great potential and opportunity. Compared to CSAO markets, East Asia has higher economic strength and market stability, which provides attractive entry opportunities for foreign companies. Therefore, the cryptocurrency market in Northeast Asia should not be overlooked, but rather, continue to be a focus of attention and interest.
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