Vol. 11, Special Issue 11, Part A (2025)

Abstract
Decentralized Finance (DeFi) represents a transformative paradigm in the financial sector, leveraging blockchain technology to offer intermediary-free financial services. This study examines the impact of DeFi on the adoption of digital currencies and its role in promoting financial inclusion, drawing exclusively on secondary data from reputable sources such as World Bank reports, Chainalysis indices, Reserve Bank of India (RBI) publications, National Payments Corporation of India (NPCI) data, and academic journals. The analysis reveals that DeFi has significantly accelerated digital currency adoption globally, with India leading the 2025 Chainalysis Global Crypto Adoption Index, where the country ranks first in DeFi value received, retail, and institutional centralized service value. This surge is attributed to DeFi's ability to provide accessible financial tools to unbanked populations, potentially enhancing inclusion by democratizing access to credit, savings, and remittances. However, limitations persist, including speculative-driven participation in regions like ASEAN, as highlighted by the OECD, and risks such as volatility, security vulnerabilities, and regulatory gaps noted by the RBI. Secondary data indicate that global cryptocurrency ownership reached 560 million users in 2024, with India accounting for approximately 119 million holders, underscoring rapid adoption amid India's digital payments boom via Unified Payments Interface (UPI), which processed over 20 billion transactions monthly and empowered underserved communities. The study employs qualitative synthesis of these data to discuss opportunities and challenges. Findings suggest that while DeFi fosters inclusion—evidenced by a 69% year-on-year increase in Asia-Pacific crypto transaction values—DeFi's potential is curtailed by inadequate financial literacy and regulatory frameworks. Policy recommendations include balanced regulations to mitigate risks while harnessing DeFi for inclusive growth. This research contributes to academic discourse on fintech innovations, emphasizing the need for evidence-based policies in emerging economies.