Crypto Ownership Falls Despite Market Growth – Report

As noted in a recent Fed report, interest in future crypto purchases is rising, but ownership rates remain low.

According to recent findings from the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute (CFI), crypto ownership has not grown in step with the crypto market’s recent recovery. Data collected between January 2022 and July 2024 revealed a significant drop in ownership, even as the market rebounds.

The CFI’s study found that crypto ownership declined sharply during the 2022 bear market. In January 2022, 24.6% of the surveyed population owned crypto.

By October 2022, that number had dropped to 19.1%. Despite a recovery in the market over the next 18 months, the percentage of crypto holders continued to fall. As of January 2024, ownership rates dipped further to 15.4%.

Bitcoin’s Price Peak Didn’t Boost Ownership Rates

Interestingly, Bitcoin’s price fluctuations were used as a benchmark for analyzing ownership trends. However, Bitcoin’s March price peak and its April halving event showed no significant impact on increasing ownership.

In April 2024, only 16.1% of respondents owned cryptocurrency, a figure that further decreased to 14.7% three months later. Despite these falling ownership rates, the Fed’s report noted a growing interest in cryptocurrency purchases in the future.

While interest in buying crypto dropped significantly during the 2022 crypto winter (from 18.8% to 10.6%), this trend reversed as the market started to recover. By April 2024, 21.8% of respondents expressed interest in purchasing more cryptocurrencies in the future.

The data collected by the Fed came from two web-based surveys, which gathered input from 5,000 respondents. These surveys aimed to provide a snapshot of cryptocurrency ownership in the US.

The findings offer a stark contrast to a May report from the Fed, which found that roughly 18 million Americans owned cryptocurrency in 2023. That number is notably lower than a report from Coinbase in September 2023, which estimated that 52 million Americans held cryptocurrency.

Growing Interest in Crypto Purchases

The cryptocurrency market itself has been on an uptrend since the start of 2023, gaining nearly 150% despite some downturns that began in mid-March. However, this market growth has not significantly influenced ownership levels across the US, as indicated by the survey results.

The Federal Reserve’s report showed that while interest in future purchases may be rising, actual ownership has continued to fall.

Kraken Calls for Clearer Cryptocurrency Rules in Australia

Meanwhile, Kraken has called for clearer regulations in Australia’s crypto industry after a Federal Court found part of its fiat margin trading product to violate local laws. The cryptocurrency exchange issued a statement recently, expressing concern about the regulatory uncertainty facing the country’s crypto sector.

Kraken described the current regulatory environment as “confusing and uncertain” for crypto businesses and investors. The exchange pointed out that the recent court ruling further exposed weaknesses in Australia’s approach to regulating digital assets.

Hence, the company urged authorities to implement clearer, more defined regulations that can keep up with the rapidly evolving crypto market. The legal issues stem from Kraken’s subsidiary, Bit Trade, which was the subject of civil proceedings brought by the Australian Securities and Investments Commission (ASIC) in September 2023.

ASIC claimed Bit Trade did not comply with Australian laws by failing to conduct a target market study for its fiat margin trading product before offering it to customers. In its final ruling, the Federal Court’s decision favored ASIC, restricting Kraken’s margin trading activities in the country. However, the exchange still maintained that crypto margin trading on its platform remains unaffected.

Kraken Urges Custom Regulations for Crypto

In her statement, ASIC’s Deputy Chair Sarah Court noted that the case against Bit Trade is aimed at ensuring compliance within the rapidly growing cryptocurrency sector. Nevertheless, Kraken stated that it remains committed to offering services in Australia and hopes for clearer regulations that support the growth of the cryptocurrency industry in the country.

The exchange has reiterated its calls for regulations tailored to the needs of the digital asset market rather than applying traditional financial rules that do not always align with the uniqueness of the cryptocurrency industry.

Kraken reiterated that a well-defined regulatory framework is crucial for ensuring the long-term success of cryptocurrency businesses in Australia. Otherwise, crypto companies and investors will continue to face unnecessary challenges, hindering the growth of the sector.

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