Brazil and Indonesia lead the world in crypto adoption, according to a new survey from United States cryptocurrency exchange Gemini.

The survey found that 41 percent of people surveyed in the two countries reported crypto ownership, compared with 20 percent in the United States and 18 percent in the United Kingdom.

Almost half of all cryptocurrency owners in the United States, Latin America and the Asia Pacific purchased digital assets for the first time in 2021, it found.

The survey of nearly 30,000 people across 20 countries, which was conducted between November 2021 and February, shows 2021 was a blockbuster year for crypto, with inflation in particular driving adoption in countries that have experienced currency devaluation, the report found.

Gemini found that 79 percent of people who reported owning crypto last year said they chose to purchase the digital assets for their long-term investment potential.

People who do not currently own crypto and live in countries that have experienced currency devaluation against the US dollar were more than five times as likely to say they planned to purchase crypto as a hedge against inflation.

Only 16 percent of respondents in the US and 15 percent in Europe agreed that cryptocurrencies hedge against inflation, compared to 64 percent in Indonesia and India, for example.

The Indian rupee has declined 17.5 percent against the dollar in the last five years, while the rupiah depreciated 50 percent against the dollar between 2011 and 2020.

Only 17 percent of Europeans reported that they owned digital assets in 2021, and only 7 percent of those who do not currently own crypto said they intended to buy digital assets at some point.

It remains to be seen if the adoption momentum can keep pace this year.

While the most popular cryptocurrency, bitcoin, hit an all-time high of more than US$68,000 in November, helping to push the value of the cryptocurrency market to $3 trillion, according to CoinGecko, it has traded in the narrow range of $34,000-$44,000 for most of 2022 so far.

Tax on crypto

Indonesia plans to charge value-added tax (VAT) on crypto-asset transactions and an income tax on capital gains from such investments at 0.1 percent each, starting from May 1, a tax official said on Friday, amid a boom in digital asset trading. 

Interest in digital assets has surged in the country during the COVID-19 pandemic, with the number of crypto asset holders jumping to 11 million by the end of 2021. 

Last year's total crypto-asset transactions in commodity futures markets reached Rp 859.4 trillion ($59.8 billion), up more than 10 times from 2020's transaction value, data from the Commodity Futures Trading Regulatory Agency showed. 

Indonesians are allowed to trade crypto assets as a commodity but not to use them as a means of payment. 

"Crypto-assets will be subject to VAT because they are a commodity as defined by the trade ministry. They are not a currency," the official, Hestu Yoga Saksama, told a media briefing.

 "So, we will impose income tax and VAT." 

The government is still working on the implementing regulation for the taxes, he added. 

The VAT rate on crypto-assets is well below the 11 percent levied on most Indonesian goods and services, while the income tax on capital gains, at 0.1 percent of gross transaction value, matches that on shares. 

Officials said a wide-ranging tax law passed last year was the legal basis for taxes on crypto assets. That law aimed to optimize revenue collection hit by the aftermath of the COVID-19 pandemic.

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