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Despite the crypto winter, 75% of crypto holders are confident about the future of the industry - Paxos

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(Kitco News) - Ask any crypto proponent and they will tell you that 2022 was a year to forget for the crypto market as the high-profile collapses of Terra and FTX initiated contagion shockwaves that resulted in more than $2 trillion in value being lost from the total crypto market cap.

Despite this fact, consumer trust and confidence in the crypto industry remains high, according to the results of a survey conducted by Paxos, a regulated blockchain infrastructure platform that specializes in the issuance of stablecoins.

Paxos’ intent in conducting the survey was to “learn how the 2022 crypto winter and large industry fallouts impacted consumer behavior and confidence in the crypto ecosystem.”

The survey was conducted from Jan. 5 to Jan. 6 and included 5,000 respondents aged 18 or older who live in the United States and have a total household income greater than $50,000. The survey was limited to those who currently have a bank account and made at least one cryptocurrency purchase in the last three years.

Out of those surveyed, more than 75% indicated that they are very confident or somewhat confident in the future of cryptocurrency, which is similar to the findings from the 2022 survey. “Additionally, 72% of respondents reported that they are a little or not at all worried about the volatility of the crypto markets seen over the past year,” the report said.

Not only did the events of 2022 fail to dampen the long-term outlook for crypto holders, some saw it as a good time to enter the market, as 27% of respondents indicated that they purchased crypto for the first time last year.

Trust in centralized entities remains high

Despite the bankruptcy of FTX and several other high-profile crypto companies – including Celsius, Voyager Digital, BlockFi and Genesis – crypto owners still trust centralized entities to custody digital assets on their behalf, with 89% of respondents reporting that they trust banks, crypto exchanges, and/or mobile payment apps to hold their crypto.

Crypto consumers actually want their banks to become more involved with the crypto ecosystem, as 75% of those surveyed said they are likely or very likely to purchase crypto from their primary bank if it were offered, a 12% increase from the previous year’s survey results. “Additionally, 45% of respondents reported they would be encouraged to invest more in crypto if there was more mainstream adoption by banks and other financial institutions,” Paxos wrote.

While many think of companies like Coinbase when it comes to purchasing crypto, two of the top three platforms crypto owners use to purchase crypto – PayPal (31%) and Robinhood (26%) – are non-crypto-focused fintech companies.

“Banks have a significant untapped opportunity to enter the market and meet the needs of existing customers by expanding their offerings to support digital assets,” the report said. “Not only would these services satisfy increasing demand, but they would also result in higher engagement. Of survey respondents who purchased crypto in the past year, 68% made purchases at least 1-2 times per month.”

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Driving motivations behind crypto investments

When it comes to the reason that those surveyed are interested in cryptocurrencies, the survey found that the reason most cited was as a long-term investment (52%), and three of the top five most desired use cases involve everyday financial transactions, including payments and remittances.

Top five reasons survey respondents are interested in using crypto. Source: Paxos

Aside from serving as a long-term investment, the other popular reasons include paying for goods or services (42%), credit card loyalty rewards (38%), day trading (36%), and sending money to friends or family (34%). The survey also found that users would like mainstream financial service providers to offer products and services that support crypto.

“This presents a major opportunity for companies to enable crypto purchases of goods from merchants and crypto payments between friends and families,” Paxos said. “The widestream adoption of crypto may have a flywheel effect with 40% of respondents saying they would be encouraged to invest more in crypto if more merchants accepted crypto payments.”

One final area where respondents would like additional support is with crypto education, as 37% of those surveyed said they would be encouraged to invest more in crypto if more education were available.

“This year’s survey results confirmed that the crypto marketplace is undeterred by the ecosystem’s volatility and the collapse of FTX and Alameda Research,” Paxos wrote. “Consumers desire greater accessibility of crypto and more comprehensive integration into daily financial transactions, including those supported by banks and fintechs.”

“As interest in crypto continues to grow despite market headwinds, helping consumers engage with cryptocurrencies – a clear desire indicated by this year’s survey respondents – could significantly contribute to the long-term business models of financial services companies,” Paxos concluded.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.