Recently, the Bank of Canada released a report on the ownership of crypto in the nation. The report studied trends and practices which were prevalent among the crypto owners last year.
In the report released Wednesday, the bank revealed that Canadians sold out of their Bitcoin positions in 2022. However, the investors did not ”shift out of Bitcoin and into other crypto assets, as we observed decreased ownership of altcoins.”
Additionally, the Bank of Canada found that under a third of Bitcoin owners “are highly literate about how the Bitcoin system actually works, while a slightly larger proportion have basically no knowledge.”
About the altcoins, the report stated that altcoin ownership remained roughly the same in 2022 as it was in 2021. Only about a percent of Canadians surveyed owned a stablecoin. In the meantime, the ownership for ETH took a slide. The bank wrote:
The ownership rate for Ether, the second most popular cryptoasset, declined from 7% in 2021 to 4% in 2022.
Further, the report revealed that in 2021, Bitcoin holders cashed out for profit while “the decline in Bitcoin ownership from 13% to 10% contrasts with stable ownership rates observed from 2017 to 2018 (5%) when prices declined even more than between 2021 and 2022.”
Amid this, the market volatility which was witnessed for the majority of last year tested investors’ protection. Last year, the price of Bitcoin was volatile as crypto winter settled in and the collapses of TerraUSD and FTX sent shockwaves throughout crypto.
The Bank of Canada believes that the decline in Bitcoin ownership last year “shouldn’t be surprising” because 2021 saw many Canadians invest “record” amounts in traditional financial assets as well as crypto assets such as Bitcoin, which helped to “explain the increase in the ownership rate to 13% in 2021.
However, the bank suggests that jumping into investments isn’t the only reason that Canadians were interested in Bitcoin. The report noted that 24% of Bitcoin owners in 2022 “cited technology-related reasons, such as an interest in new technologies, for holding the crypto asset,” whereas only 11% said that they held Bitcoin for payment reasons. The bank stated:
With the exception of 2021, the percentage of owners citing payment-related reasons for owning Bitcoin has steadily declined from its peak in 2016.
Reportedly, the bank explicitly highlighted that the volatility not only in crypto markets, but also in financial markets, helped to “reduce investors’ appetites for risky assets, including cryptocurrencies.”
Notably, the report also touched the regulatory angle in the report considering the strict approach of the regulators. As reported by Todayq News, the Canadian Securities Administration (CSA) have been forcing cryptocurrency platforms to “comply with investor protection laws” which have been in turn extremist pushing exchanges away.
Simultaneously, Canadian residents have also been reported to have noticed and been impacted by the behaviour of the US Securities and Exchange Commission (SEC). The SEC has been on an enforcement spree and intends to progress it despite criticisms.
It is important to note that while there has been an increasing number of crypto related crimes pushing regulators to be strict, that is something investors doesn’t seem to have liked. However, a balance between regulation and innovation will prove to be beneficial for investors and the larger industry.