Owning crypto has nothing to do with distrust of Fiat: BIS study

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The Bank for International Settlements (BIS), a global financial institution owned by some of the largest central banks in the world, seeks to dispel the theory that owning cryptocurrencies is linked to distrust of traditional finance.

On Thursday, the BIS published a paper on the socio-economic drivers of cryptocurrency investments in the US. Using representative data from the US Survey of Consumer Payment Choice, the BIS argued that distrust of fiat currencies such as the US dollar had nothing to do with investor motivation to hold cryptocurrencies such as Bitcoin (BTC), stating:

“The demand for cryptocurrencies is not driven by distrust of cash or the financial industry, as there are no differences in the perceived security of cash and offline and online banking. With this we can provisionally refute the hypothesis that cryptocurrencies are being sought as an alternative to fiat currencies or regulated finances. “

The authority emphasized that crypto currencies are not sought as an alternative to fiat currencies or regulated finances, but rather are a “digital niche speculation object”. The BIS noted that, from a policy perspective, the overall lesson of the analysis is that investor goals are the same as for other asset classes, so regulation should be.

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The BIS paper also outlines important correlations between crypto investment decisions and education and income levels, suggesting that cryptocurrency owners are “generally above average”. Ether (ETH) and XRP investors were the most educated in the BIS analysis, while those who owned Litecoin (LTC) were the least educated, while Bitcoin owners were in the middle.

Average education by crypto owner. Source: BIS

The new report brings with it considerable relevance that cryptocurrencies like Bitcoin pose no threat to traditional financial instruments, as the demand for crypto is not driven by distrust of cash. A number of global authorities and institutions previously expressed concerns about Bitcoin’s ability to capitalize on global distrust of traditional finance.

In late December, Morgan Stanley Investment’s Ruchir Sharma argued that the US dollar’s reign was likely to end due to global distrust of traditional finance, while Bitcoin would capitalize on the lack of trust.