There are two types of cryptocurrency users, those who hold it purely as an investment and those who rely on it for transactions, and the two groups tend to be in very different income brackets, a Federal Reserve Board survey found.
Roughly 60% of those who transact with cryptocurrencies made $50,000 or less in 2021 compared to 24% who made $100,000 or more, according to the Fed’s latest Economic Well-being of U.S. Households report, which surveyed 11,000 adults last October and November.
Meanwhile, among those who held crypto as an investment asset, roughly half made more than $100,000 annually against just 29% of those earning $50,000 or less, according to the report, which was released Monday morning.
On average, those who used crypto for purchases, payments or sending money to family were also far less likely to have a bank account, credit cards or any retirement savings than crypto investors. Transactional users were twice as likely to be unbanked as those who did not use cryptocurrencies at all, the Fed found.
Overall, 12% of adults reported having some exposure to cryptocurrency last year, with most saying they used it primarily as an investment. Two percent of those surveyed said they used it for purchases or payments while 1% said they used it to send money to relatives.
The disparities in crypto use were one of several findings in the Fed’s annual report on the financial well-being of U.S. households. Across the board, 78% of respondents reported doing OK or living comfortably last year, the highest rate tracked by the Fed since it began the survey in 2013.
Similarly, a record 68% of adults said they could pay for an unexpected expense of $400 in cash or with an equivalent payment system. Also, households felt more positively about their retirement savings than in 2019 or 2020.
A Fed spokesman said it is impossible to account for the exact causes of the financial improvements tracked in the report, but noted that federal stimulus programs, a resurgent economy and the reopening of schools — key for parents resuming work and reducing their childcare expenses — all contributed.
The findings reflect the state of the economy before the omicron variant of COVID-19 took hold in the late fall and before inflation spiked to a four-decade high.
The economic gains tracked by the report cut across all racial groups, albeit not evenly. Adults identifying as Hispanic saw the sharpest increase in their financial well-being, with 71% saying they were doing at least OK financially in 2021, compared with 64% in 2020. White respondents saw the slightest increase, with 81% saying they were doing OK financially, up 1 percentage point from 2020. Among Asian respondents, 88% said they were doing well financially, compared with 84% in 2020, while 68% of Black respondents were satisfied with their financial well-being, a 4-percentage-point increase.
