Chainalysis Says ‘Crypto Winter’ Hasn’t Discouraged Developing Nations

China put in a mighty showing in blockchain data firm Chainalysis’ annual Global Crypto Adoption Index, landing a 10th place ranking despite the country’s total ban on crypto trading.

While China had slipped to 13th place last year after the September 2021 crypto ban took effect, the report noted that the ban was either “ineffective or loosely enforced.”

The index seeks to give a more nuanced view than a simple listing on trade volume, which would inevitably be skewed heavily towards richer countries. Instead, emerging markets “dominate the Index,” Chainalysis noted.

Notably, the lower middle and upper middle-income countries in which users “rely on cryptocurrency to send remittances, preserve their savings in times of fiat currency volatility, and fulfill other financial needs unique to their economies” dominated, accounting for 18 of the top 20 countries on the Index.

As far as wealthy countries, only the U.S. and U.K. made the list.

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Vietnam, the Philippines, Ukraine, India, Pakistan, Nigeria, Morocco, Nepal, Kenya and Indonesia were the lower middle-income countries, and Brazil, Thailand, Russia, China, Turkey, Argentina, Colombia, and Ecuador were the upper middle-income countries.

What those countries largely shared was growing use of crypto — particularly bitcoin and stablecoins — for remittances and a need to store value that largely survived digital assets’ volatility due to rampaging inflation.

Overall adoption of crypto may have slowed and retreated, but it is still far above what it was before the 2020 and 2021 bull markets that saw bitcoin and other cryptocurrencies soar to new heights.

“The data suggests that many of those attracted by rising prices in 2020 and 2021 stuck around and continue to invest a significant chunk of their assets in digital assets,” Chainalysis said. “One reason for this could be the value that users in emerging markets get from cryptocurrency.”

Latin America

In Latin America, a growing use of decentralized finance, or DeFi, suggested an ongoing desire to use crypto to build wealth, Chainalysis said.

Look at inflation rates of 114% in Venezuela and 79% in Argentina. Even in more stable countries — such as Latin America’s five largest countries, Brazil, Chile, Colombia, Mexico and Peru — inflation rates reached 25-year highs, Chainalysis noted.

Dollar-pegged stablecoins remained a favorite in Latin America’s “inflation-ravaged countries,” with the report noting that Venezuela was unrated due to the lack of reliable information about its PPP per capita. However, more than one third “of all small retail transaction volume in Venezuela consisted of stablecoin trades — more than any other country in Latin America,” Chainalysis said. “This aligns well with the store-of-value thesis behind Venezuela’s grassroots adoption of crypto.”

South Asia

In South Asia, a crypto regulatory clampdown in India and Pakistan dampened activity — India enacted a 30% capital gains tax with no capital losses offset, while Pakistan is looking into an outright ban on cryptocurrencies.

In Southeast Asia, on the other hand, use soared, with remittances and play-to-earn blockchain-based video games behind Vietnam’s return to the Index’s No. 1 slot and the Philippines climbing from No. 15 to second place.


The Middle East and North Africa had the highest year-over-year growth in crypto transaction volume, with 48%, ahead of Latin America’s 40% and Central and Southern Asia’s 35%.

MENA had the same drivers as Latin America, with “savings preservation and remittance payment” big factors, egged on by increasingly permissive crypto regulations in parts of the region, notably Morocco. Turkey’s lira inflated more than 80% in the past year, while the Egyptian pound weakened by 13.5%, it noted.

“Egypt’s position at the intersection of growing crypto remittances and increased inflationary pressures help explain why it’s the fastest growing crypto market in all of MENA this year,” the report said, noting that Egypt’s crypto transaction volumes tripled in the past 12 months compared to the year previous.

Sub-Saharan Africa

While Sub-Saharan Africa unsurprisingly accounts for the smallest amount of crypto transaction volume, “numbers can be deceiving, as deeper analysis reveals that Africa contains some of the most well-developed cryptocurrency markets of any region, with deep penetration and integration of cryptocurrency into everyday financial activity,” Chainalysis said, pointing to Nigeria and Kenya.

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“Crypto usage driven by everyday necessity, as opposed to speculation by the already well off, could explain an interesting phenomenon we saw in Sub-Saharan Africa this year,” it said. “The number of small retail transfers actually grew starting at the onset of the bear market in May, while the number of transfers of other sizes fell.”

More than that there are signs that young people in the region see crypto as a way to preserve and build wealth despite few economic opportunities, Chainalysis added.

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