India ranks 7th in cryptocurrency space

United Nations: Over seven per cent of India's population owns digital currency, according to the UN, which said that the use of cryptocurrency rose globally at an unprecedented rate during the Covid-19 pandemic. The UN trade and development body UNCTAD said that in 2021, developing countries accounted for 15 of the top-20 economies when it comes to the share of the population that owns cryptocurrencies.

Ukraine topped the list with 12.7 per cent, followed by Russia (11.9 per cent), Venezuela (10.3 per cent), Singapore (9.4 per cent), Kenya (8.5 per cent) and the US (8.3 per cent). In India, 7.3 per cent of the population owned digital currency in 2021, ranking seventh in the list of top 20 global economies for digital currency ownership as share of population.

"Global use of cryptocurrencies has increased exponentially during the Covid-19 pandemic, including in developing countries," UNCTAD said. In three policy briefs published on Wednesday, it said that while these private digital currencies have rewarded some and facilitate remittances, they are an unstable financial asset that can also bring social risks and costs.

The policy brief titled "All that glitters is not gold: The high cost of leaving cryptocurrencies unregulated" examines the reasons for the rapid uptake of cryptocurrencies in developing countries, including facilitation of remittances and as a hedge against currency and inflation risks. It said that recent digital currency shocks in the market suggest that there are private risks to holding crypto, but if the central bank steps in to protect financial stability, then the problem becomes a public one.

"If cryptocurrencies become a widespread means of payment and even replace domestic currencies unofficially (a process called cryptoisation), this could jeopardise the monetary sovereignty of countries," it said. In developing countries with unmet demand for reserve currencies, stablecoins pose particular risks. For some of these reasons, the International Monetary Fund has expressed the view that cryptocurrencies pose risks as legal tender, it said.