In our previous report, we looked at the high appetite of individuals in emerging markets for cryptocurrency. In this report, we explore regional cryptocurrency trends further. Our key findings:
Europe is the largest region globally by cryptocurrency value received and growing strongly on the back of rising institutional activity.
North America: The US is the top market globally in terms of transaction volume and also well ahead in the adoption of decentralised finance (DeFi) platforms.
Latin America: Argentina, Brazil and Venezuela have strong cryptocurrency adoption rates. Remittances are one of the key reasons for cryptocurrency adoption in some markets (eg Venezuela).
Asia’s market share has declined significantly due to the slowdown in China, after its recent crackdown on cryptocurrency mining and other restrictions.
The Middle East has registered strong growth in cryptocurrency transactions as people, in markets like Turkey, turn to cryptocurrencies for preserving savings against currency depreciation.
Africa accounts for just 3% of global cryptocurrency value received, but some of its markets, such as Kenya, Nigeria and Togo, have high adoption rates when adjusted for purchasing power. Africa also has a higher share of retail trading volume versus other regions.
Cryptocurrency transactions have grown strongly in 2021
Global cryptocurrency value received grew by over 1,000% yoy in July 2020-June 2021. Central, Northern and Western Europe grew at the strongest rate (+1,540% yoy), on the back of rising institutional activity. Transaction activity in the Middle East (+1,498% yoy) and Latin America (+1,370% yoy) also grew strongly.
In contrast, East Asia witnessed the slowest growth of all regions (due to the crackdown on crypto mining in China), but still grew by a respectable 452%.
Europe and North America are the most important regions; East Asia has lost share
Europe and North America accounted for over half of global cryptocurrency value received in the year to June. Africa is the smallest region, with a mere 3% share of global cryptocurrency flows, despite some of its bigger economies, such as Kenya and Nigeria, ranking at the top of the global cryptocurrency adoption index. This is because the adoption index is adjusted for purchasing power and internet penetration.
Looking at the change in market share over the past two years, East Asia has lost significant market share, with Central, Northern & Western Europe being the key beneficiaries of this shift.
Global cryptocurrency transaction volume market share by region
One major reason behind the fall in East Asia's market share is China’s regulatory crackdown on cryptocurrency mining. China had a 75% market share of global crypto mining a year ago, which is now down to zero; Canada, Kazakhstan and the US have been the key beneficiaries.
Electricity costs in much of Europe tend to be high, which has likely limited the attraction of this continent for miners.
North America and East Asia have scope to further grow crypto adoption
In the scatter plot below, we compare each region’s share of global cryptocurrency value received to its share of global GDP.
North America and East Asia, despite having the second- and third-biggest market shares of global crypto trading, lag behind relative to their income levels; this indicates scope to grow cryptocurrency adoption and transaction activity further.
In contrast, Europe, Latin America and Central/ Southern Europe have strong cryptocurrency adoption levels.
Central, Northern & Western Europe
The region received US$1tn in cryptocurrency value in July 2020-June 2021, accounting for 25% share globally, making it the largest market by far.
Within the region, the UK, France and Germany reported the highest level of cryptocurrency value received.
There has been strong growth in cryptocurrency transaction volume in 2021, mainly driven by rising institutional activity. Staking (ie lending) cryptocurrencies on DeFi platforms is one reason for the surge in institutional trading.
Central, Northern & Western Europe transaction volume by transfer size
Eastern Europe received 10% of total global cryptocurrency value in July 2020-June 2021, with growth of 929% over the previous year.
The market share of the region fell from 12% last year to 10% this year. The decline is mainly due to reduced person-to-person (P2P) activity, but is also attributable to a change in the methodology used by Chainalysis.
Ukraine and Russia are the biggest markets in the region, with high levels of cryptocurrency adoption.
According to Chainalysis, capital controls are among the possible reasons for the popularity of cryptocurrency in Russia and Ukraine. These markets have a high share of transfers to international addresses in their total cryptocurrency transaction volume, indicating people are using cryptocurrencies to transfer funds abroad (see below).
Considering illicit activities, Eastern Europe has the highest share of funds sent to the darknet market.
The region attracted 18% of global cryptocurrency value received in July 2020-June 2021. Unsurprisingly, the US is the major market in the region.
The monthly cryptocurrency transaction volumes in the region have grown strongly (c1,000% yoy) in July 2020-June 2021.
The US is the top market globally for the adoption of DeFi platforms that allow cryptocurrency trading without intermediaries.
The top trading platforms by transaction volume are Uniswap (a DeFi platform) and Coinbase.
In terms of cryptocurrency-based crime, North America is the biggest victim of ransomware attacks. Some examples of types of ransomware attacks include NetWalker, Egregor and Phoenix Cryptolocker.
North Amercia’s top cryptocurrency services by transaction volume (Jul 2020 -Jun 2021)
Source: Chainalysis. Note: Blue = DeFi protocols, Red = centralised exchange
Latin America attracted 9% of total global cryptocurrency value received in July 2020-June 2021. Argentina, Brazil and Venezuela have strong cryptocurrency adoption rates.
Brazil is the largest market, receiving US$91bn-worth of cryptocurrencies in the period, c26% of the total value received by the region.
Remittances are one of the key reasons for cryptocurrency adoption in some of the markets in the region, such as Venezuela. Small-ticket transactions (<US$1,000), within which category the bulk of remittances fall, have grown strongly in the region.
Small-ticket cryptocurrency transactions in Latin America
Central and South Asia and Oceania
The region received 14% of global cryptocurrency value sent in July 2020-June 2021.
Transaction value in the region has grown by 706% versus the previous period, making it the third-fastest growing region.
Vietnam, India and Pakistan have high levels of cryptocurrency adoption. Thailand and Philippines also rank well.
India has a much higher share of institutional participation compared with Pakistan and Vietnam.
Share of cryptocurrency value sent by transaction size (July’20-June’21)
The region accounted for 14% of global cryptocurrency value received in July 2020-June 2021, but its share declined significantly from 31% in the previous year.
China is the largest market in the region, followed by South Korea and Japan.
The fall in the region's market share can be attributed to China's slowdown, after its recent crackdown on cryptocurrency mining and other restrictions.
Huobi.com (a centralised cryptocurrency exchange) is the most popular platform in East Asia.
China is also in the pilot phase of launching its central bank digital currency, the digital yuan. 140mn individual accounts and 10mn business accounts have opened so far, with transactions amounting to US$9.2bn.
East Asia cryptocurrency value received by country (July 2020 to June 2021)
The Middle East received 7% total global cryptocurrency value in July 2020-June 2021, and registered growth of c1,500% yoy.
Turkey is the largest market in the region followed by Lebanon, the UAE and Israel. Afghanistan also ranks well when adjusted for purchasing power and internet penetration.
One of the key factors driving cryptocurrency adoption is the preservation of savings against currency depreciation. This is more relevant for Turkey and Lebanon than for the UAE and Saudi Arabia.
Middle East cryptocurrency value received by country (July 2020 to June 2021)
Africa received just 3% of global cryptocurrency value in July 2020-June 2021, the lowest share of all the regions. However, the market grew by over 1,200% yoy.
After accounting for purchasing power parity and internet penetration, cryptocurrency adoption rates are high in Kenya, Nigeria and Togo.
Africa has a higher share of retail trading volume (7% of total) than other regions (5.5% global average).
Africa is also ahead of other regions in the contribution of P2P transaction volumes to the total. One reason for this is that certain regulators have banned cryptocurrency transactions from formal banking channels.
Cryptocurrency is also used to protect the value of savings against depreciating currencies. For example, the Nigerian naira has been under pressure for some time now and is being propped up by various restrictive measures. Chainalysis data suggests that Nigeria crypto trading volumes increase around the time of naira devaluations.
P2P transaction volume share of all transaction by region (June 2020 – July 2021)