In a recent report released by the Federal Reserve, it was revealed that the use of cryptocurrencies for financial transactions in the United States remains relatively low, despite growing interest in the crypto sector. The survey conducted as part of the 2022 Economic Well-Being of U.S. Households report indicated that the percentage of Americans holding or using cryptocurrencies dropped from 11% in 2021 to 8% in 2022, with the decline being attributed to the bearish market conditions experienced in the previous year.
However, what stood out from the survey is that the percentage of Americans engaging in crypto transactions remained unchanged from the previous year, with only 3% of respondents reporting that they used cryptocurrencies for financial transactions. The findings underscore the fact that using cryptocurrencies for transactions is still less common compared to holding them as investment assets.
When asked about their motivations for conducting crypto transactions, respondents cited faster fund transfers, transaction privacy, and the preference of the recipient for cryptocurrencies as the main reasons. Sebastian Derivaux, the founder of Steakhouse Financial, commented on the 8% penetration rate of transaction usage, stating, “8% penetration rate in transaction usage in a target group is quite strong regarding how early and UX-deficient it is. Or the US banking system is really bad.”
The report also revealed that demographic and socioeconomic factors influenced crypto usage patterns. Younger adults and men were found to be more likely to engage in both crypto investments and transactions. Additionally, income levels played a role, with higher-income individuals earning over $100,000 annually being more inclined to invest in cryptocurrencies, while those earning less than $25,000 were more likely to use cryptocurrencies for transactions.
Moreover, the survey highlighted disparities among ethnic groups in terms of crypto usage. Asians in the United States were found to be more likely to hold cryptocurrencies as investments, while Black and Hispanic respondents showed a higher inclination towards using cryptocurrencies for transactions compared to White or Asian respondents.
Interestingly, the data indicated that crypto transactions were more prevalent among unbanked individuals, with 5% of unbanked Americans using cryptocurrencies for transactions compared to 3% of banked individuals. Furthermore, individuals utilizing nonbank check cashing or money orders were more likely to conduct crypto transactions, with 8% of such respondents engaging in cryptocurrency-based transactions.
The Federal Reserve concluded that, despite the increasing popularity and interest in cryptocurrencies, their usage for financial transactions remains relatively low across all demographic groups. However, these findings provide insights into the potential for growth in the crypto sector, as the 8% penetration rate for transaction usage indicates a notable level of interest and adoption, considering the early stage and user experience limitations of cryptocurrencies.
As the crypto market continues to evolve, it will be crucial for industry stakeholders to address usability concerns and enhance the user experience to attract a broader range of users and foster increased adoption. With the right improvements and the continued expansion of crypto-related services, there is a significant opportunity for cryptocurrencies to become more widely utilized for everyday financial transactions in the future.