BIS: Crypto Investors’ Objectives Are Same as Other Asset Classes, “So Should Be The Regulation”

The report found that XRP and ETH owners are the most educated while those owning LTC are the least educated, with Bitcoiners in the middle. XRP owners also have a higher household income, with those owning XRP, ETH, and XLM being the wealthiest.

In its July 2021 report, the Bank for International Settlements (BIS) covers the socioeconomic drivers of US cryptocurrency investments and found that crypto investors tend to be educated, young, and digital natives.

It further disproves the hypothesis that crypto investors are motivated by distrust in fiat currencies or regulated finance and notes that crypto owners tend to hold their investment for longer periods.

The overall takeaway of the working paper, called “Distrust or speculation?” written by the members of the Monetary and Economic Department of BIS, from a policy perspective is that “the objectives of investors are the same as those for other asset classes, so should be the regulation.”

Calling crypto a niche digital speculation object, the report says cryptos are not sought as an alternative to fiat currencies or regulated finance.

“A clarifying regulatory and supervisory framework for cryptocurrency markets may be beneficial for the industry,” states the report while noting that regulatory announcements have had a strong impact on crypto prices and transaction volumes.

As such, it calls for implementing a supervisory framework for cryptocurrencies that allows for compliance to be automatically monitored by reading the market’s ledger as it aims for low-cost supervision of decentralized markets.

The Findings

The report is based on the Survey of Consumer Payment Choice (SCPC), which covers the 2014-19 period and is representative of the US population.

The paper found that digitalization variables positively impact the likelihood of owning at least one crypto asset. Having a debit card, using PayPal and a mobile app for payments also increases the probability of investing in crypto.

Given that “there are no differences in the perceived security of cash and offline and online banking,” the report says demand for cryptos is not driven by distrust in cash or the financial industry.

However, compared with non-owners, cryptocurrency owners tend to find both cash and traditional banking services less convenient, unlike online banking.

According to the report, education, income, being a man, and being married positively influence both knowing about and owning a cryptocurrency while being one year older (or being retired) has a significant negative effect only on owning crypto. In contrast, race has no effect on crypto ownership.

An increasing number of people are also aware of crypto, up from 40% US citizens in 2014 to almost 70% in 2019.

“If the trend continues, in one or two years, the entire US population will recognize at least one cryptocurrency,” it said. However, their acceptance and usage are not high, with only 1.4% of the US population owning at least one crypto in 2019.

Interestingly, Bitcoin (BTC) is the most widely known cryptocurrency followed by Bitcoin Cash (BCH) and Ether (ETH), while Bitcoin is most widely owned, twice as many as Ether, Litecoin (LTC) is the third most owned crypto. BTC -2.91% Bitcoin / USD BTCUSD $ 38,885.22
Volume 25.48 b Change -$1,131.56 Open $38,885.22 Circulating 18.77 m Market Cap 730.05 b
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BCH 2.27% Bitcoin Cash / USD BCHUSD $ 541.25
Volume 2.14 b Change $12.29 Open $541.25 Circulating 18.81 m Market Cap 10.18 b
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ETH 0.74% Ethereum / USD ETHUSD $ 2,592.10
Volume 22.13 b Change $19.18 Open $2,592.10 Circulating 116.95 m Market Cap 303.14 b
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LTC -0.30% Litecoin / USD LTCUSD $ 140.63
Volume 1.44 b Change -$0.42 Open $140.63 Circulating 66.75 m Market Cap 9.39 b
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While crypto owners are found to be more educated than the average, among the various cryptos, XRP and ETH owners are the most educated, and those owning LTC are the least educated, with bitcoin owners ranking in the middle.

XRP owners also have a household income level higher than the average, with owners of XRP, ETH, and Stellar (XLM) being the wealthiest, reads the report. XRP 0.15% XRP / USD XRPUSD $ 0.73
Volume 2.64 b Change $0.00 Open $0.73 Circulating 46.31 b Market Cap 33.83 b
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XLM -1.01% Stellar / USD XLMUSD $ 0.27
Volume 552.52 m Change $0.00 Open $0.27 Circulating 23.4 b Market Cap 6.42 b
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When it comes to gender, knowledge has increased among women, but the ownership gap has widened, which first emerged in 2018. As for age, crypto owners are younger, on average, than non-owners of cryptos, and “this has a strong effect on investment decisions.”

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