Crypto debuts in Fed’s economic well-being report

The Fed’s board issued its annual report on US households’ economic well-being, including cryptocurrencies for the first time.

Mother and daughter with a piggy bank

The Federal Reserve Board included cryptocurrencies in this year’s Economic Well-Being of US Households report to “better understand consumer experiences with emerging products.” According to the Fed, 12% of US adults held some form of cryptocurrency in the year prior to the survey.

The most popular use for cryptocurrencies remains investment, reported by 11% of respondents. In contrast, only 2% said that they used crypto as a means of payment, although it’s unclear whether that figure includes crypto-native items like NFT artworks. 1% of US adults transferred crypto to friends and family, making it the least popular use for cryptocurrencies reflected in the report.

The Fed’s report makes no mention of illicit transactions, which in the past year came to $14 billion worldwide, according to crypto data company Chainalysis. If any of the survey’s respondents engaged in criminal activity, they would most likely be counted among transactional users as 2021 saw darknet markets hit a revenue record of $2.1 billion.

Crypto maxis are out there

Crypto investors were “disproportionately high-income,” the Fed report concludes, with 46% making $100,000 or more. They also had strong ties to TradFi, with 99% admitting they owned a bank account and 89% reporting retirement savings.

If crypto investors can hardly be described as skeptical of TradFi, at least when it comes to consumer behavior, transactional users do appear to include a small representation of crypto maximalists who don’t own a bank account (13%), credit card (27%), or retirement savings (29%).

Share of crypto users without a bank account, credit card, or retirement savings by cryptocurrency use
Source: Economic Well-Being of U.S. Households in 2021

While cryptocurrencies were not included in the previous editions of the report, the figures representing the shares of unbanked, underbanked, and fully banked adults didn’t change much compared to 2020, suggesting that the adoption of crypto is not causing any major outflows in TradFi.

Tricky timing

By and large, the self-reported economic well-being of US households has reached the highest level since the survey began in 2013. 78% of US adults stated that they were “doing okay or living comfortably financially,” which comes as a surprise at a time when CPI has spiked 8.3% in the space of 12 months, and food prices are up 10.8%.

The discrepancy between the report’s findings and the present-day economic landscape is due to the timing of the Fed’s survey, which took place before the onset of the Omicron variant of the coronavirus and the war in Ukraine.