As crypto prices plunged in the last year so did growth in adoption worldwide, led by slowing transactions in North America and Europe.
While Europe (20.8%) and North America (18.3%) remained the two regions with the largest shares of crypto transactions received in the second quarter, their rate of growth has cooled, a new report from crypto firm Chainalysis shows. Their shares of total transaction volume also declined from the previous two quarters.
But Asian countries such as India, Vietnam, and the Philippines increased their share of crypto transactions during that time.
The trend has been dictated by decentralized finance (DeFi), according to Chainalysis director of research, Kim Grauer who noted that the report aims to access crypto’s value beyond prices.
“Yes, we’re going to have to emerge out of these terrible stock market conditions, but the race right now in North America is for the next killer app,” Grauer told Yahoo Finance. “The money that’s being invested into the space right now is in apps, experiences and users and we don’t have any clear winner there.”
According to the report, between July 2021 to June 2022, European countries (excluding Eastern Europe) received $1.3 trillion in crypto, outpacing crypto transaction flows received by any other region. Largely driven by activity in the United States, North America came in second for the same period with $1.15 trillion in crypto flows received.
For the same period, Europe’s monthly crypto received fell by 24% from $104.8 billion to $79.4 billion a month, while North America’s dropped by 12% from $82.6 billion to $72.1 billion a month. On the other hand, countries in central and southern Asia as well as Oceania saw a slight uptick from $77 billion to $83 billion per month.
For Europe and North America, DeFi accounted for 31% and 37% of total transactions received respectively.
A broadly used term in the crypto world, DeFi includes emerging finance tech that uses blockchains to decentralize goods and services. Theoretically, that includes anything from bank notes and mortgages to audio files and ride share apps. Over the past year, it has meant speculative trading of digital assets.
Based on crypto transactions and web traffic, Chainalysis found decentralized exchanges or DEXs and NFTs stood out as the most important parts of DeFi that drove people to crypto over the last year.
In turn, the crypto transactions received by DeFi projects and protocols in North America also appear to have been hit hardest by the bear market. Over the second quarter, crypto flows to centralized exchanges remained net positive in North America, but that was cancelled out by DeFi outflows.
“While North America remains the second-largest [crypto] market in the world, it has been more exposed to the bear market due to DeFi and that has caused its growth share of the total market to plateau,” Grauer added.
She also pointed to crypto adoption in Asian countries such as Vietnam, India, Philippines and Pakistan — driven in part by people’s interest less-speculative NFTs such as trading card games — to explain how they gained market share.
Christine Moy, Apollo Global Management’s head of digital assets, made a similar point during Yahoo Finance’s All Markets Summit this week.
“I think there’s probably just a small subset of us nerds that are really interested in financialization overall,” Moy said. “The path to broader adoption is something more fun, funny or [meme-like]. We’ll see it over the next few years.”
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David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on Twitter at @DsHollers
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