Casey Wagner

<div id="highlights-block_628bced79f4bd" class="highlights">
 <ul>
 <li>Fed report shows that people who use crypto for transactions are twice as likely to be unbanked</li>
 <li>Higher income earners are more likely to use crypto as an investment tool</li>
 </ul>
 
</div>



While cryptocurrencies are used as an investment tool “far more” often than as a means of payment, how digital asset holders think about tokens comes down to their income level, the Federal Reserve said in a recent report.&nbsp;



Twelve percent of adults in the US reported holding digital assets and 3% reported using crypto for purchases or money transfers, according to the Fed’s Economic Well Being of US Households (SHED) <a href="https://www.federalreserve.gov/publications/files/2021-report-economic-well-being-us-households-202205.pdf" target="_blank" rel="noreferrer noopener">report</a>.



In 2021, almost 60% of adults who used cryptocurrencies for transactions had an annual income of $50,000 or less, the Fed said in the report, while 24% of transactional users reported an annual income of $100,000 or less.&nbsp;



These users are also disproportionately unbanked, the Fed said. Lower income adults are less likely to have a traditional banking relationship, but transactional crypto users were found to be twice as likely to be unbanked as peers in the same income bracket.



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/OKrRfQT45u26JMwXo6PpZz8KKyL7IUVbj_M9JwATZClNdIzLAhl6VKVdyqbAjBcQ0BfJl8KPwac7WVDOL7pXd0Xx6CMUjDMmRsQ545wSKQgjN0uKr472sF7J9tqi7_8yvXtgycJ6PU8cfFHPhQ" alt=""/><figcaption>Source: Federal Reserve</figcaption></figure>



Among the respondents, 27% of people using crypto transactionally report they don’t have a credit card, the Fed noted, compared with 17% of non-crypto users.&nbsp;



The report might help advance crypto policy in Washington, some speculate, as it shows a legitimate use case for digital assets.&nbsp;



“[It’s] great news as it relates to the House Financial Services Committee that met late last year, which emphasized, on a bipartisan basis, that crypto could help the unbanked and democratize the banking system,” David Tawil, president of crypto hedge fund firm ProChain Capital, said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The fact is that crypto cannot be ignored and serves the public well; especially that part of the public that is shut out of the traditional banking system.”</blockquote>



On the other hand, those who hold cryptocurrency purely for investment purposes are disproportionately high-income, the Fed said. These investors also almost always have a traditional banking relationship and other retirement savings vehicles in addition to their crypto holdings, the report noted.&nbsp;



In 2021, 46% of those using cryptocurrencies only for investment had an income of $100,000 or more, while 29% had an income under $50,000.



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