Global Crypto Adoption Trends in 2023

The number of cryptocurrency holders is rapidly increasing, and in 2023, more than 400 million people around the globe own some crypto. But what does this mean for crypto adoption? For cryptocurrency to become a mainstream financial instrument, individual users, major businesses, banks, and institutions all must adopt crypto on a mass scale.

Chainalysis has recently published a thorough report on the global adoption of cryptocurrency in 2023, with a detailed analysis of regional trends worldwide.

In this article, we'll digest critical takeaways from that report, giving you a short but informative review of the global state of crypto adoption in 2023.

Global Crypto Adoption in 2023

The Chainalysis report focuses on cryptocurrency-related transactions across various types of platforms and services. The key factors considered are centralized cryptocurrency exchange volumes, on-chain retail payment transactions, DeFi protocol traffic, and peer-to-peer exchange trading volumes. These values were combined with the purchasing power parity (PPP) per capita in each region and country to create a highly accurate Global Crypto Adoption Index.

Although the number of crypto users has increased globally, the global adoption rate is somewhat down in 2023 compared to the bull market highs of 2021. However, the adoption rate is showing signs of a slow recovery, but we'll need to wait for the next full-on bull market cycle to see whether the crypto adoption rate will surpass the 2021 levels.

The adoption rate recovery has been slower in high-income countries like the US and the UK. At the same time, lower-middle-income countries such as India and Nigeria are witnessing a much faster adoption rate recovery.

Now, let's check the crypto adoption trends in each global region.

Europe

The European Union recently adopted the Markets in Crypto-Assets (MiCA) regulation in a bid to regulate the second-largest crypto market in the world, right after North America. DeFi is highly popular in Europe, with 54% of all crypto transactions in Central, Northern, and Western Europe (CNWE) in 2023 done through DeFi platforms such as decentralized exchanges. 

Regarding grassroots adoption, Europe has six of the top 50 leading global countries by crypto adoption: the United Kingdom, Germany, Spain, Italy, France, and the Netherlands. The biggest crypto economy in CNWE is the UK, with 250 billion USD of crypto transactions during the last year, and it also has some of the strictest crypto regulations in the form of the Financial Services and Markets Act 2023 (FSMA 2023).

The MiCA regulation, on the other hand, is a less strict but all-encompassing crypto regulation that prescribes how crypto exchanges and other crypto businesses in the EU can operate. The regulation especially focuses on anti-money laundering (AML) measures to prevent illegal activities on crypto exchanges. Generally, the CNWE region has a booming Web3 and blockchain economy, and analysts estimate that the regional crypto market is yet to witness true mass expansion.

While the CNWE region's crypto scene accounts for 17% of the global market in 2023, Eastern Europe has an 8.9% market share. The Eastern European crypto market suffered a 22% annual decline in 2023 compared to 2022, explained by a combination of the bear market and the war in Ukraine. Large institutional crypto transactions have been on a steady decline, but low-volume transactions and retail crypto use have maintained a persistent volume. This signifies that while major investors may be withdrawing capital, the average crypto user is still optimistic.

North America

The North American crypto market accounts for some 24% of the total global transaction volume between July 2022 and June 2023. North America is the largest crypto market in the world, and it's the leader in everyday crypto usage despite regulatory uncertainty. The key turbulence in the North American market happened right after the FTX exchange collapse, which saw many crypto holders cashing out their coins. However, the most significant drop in transaction volumes happened after the crypto-friendly Silvergate, Signature, and Silicon Valley banks collapsed. The subsequent de-peg of the USDC stablecoin caused additional panic, but the market stabilized by June 2023. 

Crypto regulations are ramping up in the US, with the SEC filing several court cases against major exchange platforms for providing non-regulated services. Also, new crypto legislations are targeting the stablecoin market to enforce strict regulations for stablecoin issuers. As a result, a high volume of the global inflow of stablecoins has moved from US-licensed platforms to those that aren't licensed in the US. 

South America

In South America, Venezuela, Argentina, and Brazil stand out as the key drivers of the regional crypto market. In South America, grassroots adoption of cryptocurrency in everyday life is what's mainly pushing the popularity of crypto upwards. Crypto is especially popular in countries like Argentina, which faces massive fiat currency devaluation, as a means for people to save money by converting it into US-dollar pegged stablecoins. The vast majority of crypto traffic in most South American countries goes through centralized cryptocurrency trading platforms. In Venezuela, a whopping 92% of all transactions are facilitated by centralized exchanges.

Brazil is the most significant market when it comes to institutional adoption by banks, payment processing services, and retailers. It's also the South American hotbed of DeFi activity, which is why 30% of crypto transactions are done on DEXs and other DeFi protocols. 

Digital currencies are also highly popular for cross-border remittances in South America. That's because South Americans working in the US can easily and quickly send remittance payments to their families through the blockchain. 

Asia and Oceania

Asia and Oceania have the most diverse cryptocurrency markets in the world. The population of these regions is the absolute leader in global grassroots crypto adoption when it comes to comparing purchasing power, the number of crypto users, and transaction volume. Crypto is definitely rapidly growing in popularity in Asia and Oceania. 

Several of the top countries from the Chainalysis Global Crypto Adoption Index are located in this part of the world: Pakistan, Vietnam, Philippines, India, Indonesia, and Thailand. The Central & Southern Asia and Oceania (CSAO) region has been particularly active in the DeFi sector during the last year, with 55% of all crypto transactions done through DEXs and other DeFi platforms. 

The Philippines are unique because they have the largest portion of crypto transactions in the region through blockchain gaming platforms. This is a result of the 2021 Axie Infinity boom, which introduced the trendsetting blockchain NFT game to more than a hundred thousand players in the Philippines. In 2022 and 2023, blockchain gaming witnessed a massive drop, but the Philippines crypto market maintained a considerable portion of blockchain gaming traffic.

Pakistan's high crypto adoption rate in 2023 is closely connected to the high inflation rate in the country that pushes people toward using US dollar-pegged stablecoins as an alternative. At the same time, India has positioned itself as the global leader in the grassroots adoption of cryptocurrency. India has the second-largest DEX trading volume in the world and the fourth-largest volume when it comes to centralized trading platforms.

The Eastern Asian crypto market was among the largest in the world back in 2020, mainly thanks to the enormous Chinese market. However, the situation changed dramatically after a series of bans on crypto and especially crypto mining in China. Luckily for Eastern Asian crypto enthusiasts, Hong Kong seems to be becoming a regional crypto hub with the introduction of several crypto-friendly regulations during the last year. Institutional use of crypto is by far the lowest in South Korea due to strict rules that require a particular type of institutional bank account linked to a trading platform account. 

 

The Middle East's crypto traffic is primarily concentrated in the UAE, Saudi Arabia, and Turkey. Saudi Arabia is one of the global leaders regarding year-by-year crypto transaction growth. Still, the UAE is the real driver of crypto adoption in the region, thanks to Web3 hubs in Dubai and Abu Dhabi. These emirates have adopted crypto-friendly regulations supporting crypto entrepreneurship and encouraging blockchain companies to set up shops. Turkey is also witnessing a steadily growing adoption rate because of the high inflation rate and the devaluation of the local fiat currency. 

Africa

Despite having a population of 1.2 billion people, Africa's crypto market share was less than 3% in 2023. The use of cryptocurrency in Africa is led by Nigeria, South Africa, and Kenya, while the rest of the content's countries have a negligible crypto transaction volume. The state of the African crypto market reflects the unfortunate fact that the continent is home to many of the most economically impoverished countries in the world.

Nevertheless, compared to previous years, 2022-2023 has seen Africa maintain a steady adoption rate, mainly thanks to Nigeria. The country is in the number 2 spot on the Chainalysis Global Crypto Adoption Index. This is because Nigerian citizens are flocking to cryptocurrency as a safer alternative to the Nigerian Naira's high inflation rate. However, instead of stablecoins, Bitcoin is the primary cryptocurrency used in Nigeria. Nigerians use BTC more as a long-term store of value alternative to the traditional banking system, while stablecoins are used in everyday transactions.

South Africa leads the continent when it comes to crypto regulations. The country's Financial Sector Conduct Authority (FSCA) recently introduced a licensing protocol for crypto exchanges to regulate the rapidly growing crypto market. 

In Kenya, the local central bank has taken on the country's crypto regulator role by advocating for a crypto bill that will introduce mandatory AML measures for exchanges. Also, the central bank is exploring the introduction of a central bank digital currency (CBDC) in the near future.