A survey carried out last month of 1000 American investors by CreditDonkey found 72% own some form of cryptocurrency, compared with 64% who own stocks. It is a staggering number when you consider that stock ownership has been a foundation stone of US retail investment for over a century.
US personal finance website CreditDonkey also found that stocks remain the favoured traditional form of investment. Just over 42% of investors held bonds as well. Obviously the data does not provide perspective on how much of a portfolio is sitting in equities versus cryptocurrencies. A dabbler with $1000 of crypto might also have $1m in blue chip stocks,
But what the data does demonstrate is the ease and prevalence of digital currency access in US society and how this market has moved from the fringes to the mainstream.
Many investors expect cryptocurrencies will replace the USD
There are some other staggering findings however. Nearly 75% think that cryptocurrencies will eventually replace the dollar, with 20% expecting that this will happen in the next 10 years. Over half are in favour of more regulation of the crypto market, with less than 20% in active opposition. Eighteen per cent would still prefer to store cryptocurrencies with traditional banks, opening up scope for main street banks to potentially offer cryptocurrency custody services for clients.
“There’s an opportunity for banks as well as exchanges,” CreditDonkey said in a statement. “People are used to trusting banks with their money. If banks gave them the same convenience and security for their crypto as they did with their cash, more than a few would be interested in keeping their coins there. The news may be less good for makers of popular hardware wallets like Ledger and Trezor.”
Crypto investors don’t like hardware wallets
Currently fewer than 10% of investors want to use so-called hardware wallets. About a third would like to be able to trade on an exchange. This certainly creates an opportunity for the market in exchange-traded funds that can track crypto prices, although these are still facing considerable regulatory hurdles in many countries.
Listen: Podcast with Stephen Ehrlich, CEO of Voyager Digital, on trading and investing in cryptocurrencies
The data poses some interesting challenges for the cryptocurrency industry. On the one hand, US investors are embracing innovation. Survey data indicated nearly half are supportive of decentralised finance, but at the same time the bulk of investors don’t like the current wallet system of accessing cryptocurrency markets and would prefer to trade using other, more traditional means like brokerage accounts and online banking. That would require regulators and banks to step up to the plate.
Blockchain technology does have the scope to rewrite the fintech rules of the game and create new opportunities for players, and those financial institutions that don’t react quickly enough do run the risk of being left out in the cold. Some brokerages have already made this move. We know that Robinhood and Webull offer online trading of cryptocurrencies in the US, along with Voyager Digital. We also know that there are plans being hatched by some US brokerages to offer this kind of service in Europe, and soon. Much will depend on the posture of European regulators, of course.