Market Experts View Cryptocurrencies As Major Risk, Fed Survey Reveals

Market Experts View Cryptocurrencies As Major Risk, Fed Survey Reveals

The latest version of the US Federal Reserve’s Financial Stability Report has highlighted cryptocurrency as one of the threats to financial stability. The survey polled responses from market experts, including investors and academics, political advisers, and brokerage firms.

Fear of Cryptocurrency Replaces Coronavirus Pandemic Worries

Cryptocurrencies like Bitcoin and stablecoins were seen as a potential risk to the financial stability of the existing financial system, according to about 20% of the 24 professionals contacted by the Fed in the report.

Recall that the Feds had not included cryptocurrencies or stablecoins as a threat in a previous analysis of the risks. Instead, the coronavirus pandemic was mentioned in the previous report published in November.

The top risks or vulnerabilities in the Thursday report were all associated with the pandemic and its effects on the US and global economies. “Vaccine-resistant variants” ranked the highest, with 60% of respondents earmarking it as a potential threat to the continued stability of the economy.

This was followed by a “sharp rise in real interest rates,” which took 50%.

Inflation surge” came next, with 45% of respondents stating this may adversely impact the economy. “US-China tensions” and “risky asset valuations/corrections” both saw 35% of participants tapping them as probable threats, among other concerns.

Fed Reserve, A Potential Threat Not Crypto

The Federal Reserve has been seen as a potential threat to financial stability in the past due to the alleged printing of trillions of dollars by the Central bank, which sprung worries of inflation.

The Fed was said to have pushed the printing of dollars agenda as one of the many tools to help prop up the ailing economy during the coronavirus pandemic.

It also said that it could allow inflation to exceed its 2% target to escape the pandemic-induced recession; it won’t rush to raise rates to head off inflation.

Although Bitcoiners and crypto enthusiasts have argued that the Feds money printing practices could threaten financial stability and cause inflation, some economists do not believe so.

These concerns come at a time where cryptocurrencies have gotten a worldwide embrace from mainstream markets and institutional investors. Companies like Tesla, PayPal, Microsoft, Etsy, VISA, MasterCard, among others, have increasingly adopted cryptocurrencies for payments and services.

MasterCard recently signed a partnership with crypto exchange Gemini to help launch its cryptocurrency rewards credit card. The credit card would offer crypto cashback to Gemini customers every time they shop with it.

In the same vein, VISA partnered with Fintech firm Tala to push the use of the USD Coin (USDC). The collaboration involved Circle, the company behind USDC, and the Stellar Development Foundation that oversees the XLM cryptocurrency coming together to provide access to USDC via its digital wallet.

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Author: Jimmy Aki

Survey: South Korean Investors Welcome Controversial Crypto Tax Law

A new survey has revealed that a majority of South Korean investors support the proposed crypto tax law set to be unveiled next year.

53.7% Support Crypto Gains Tax

According to a recent survey sponsored by local television station YTN, many South Korean crypto investors support the government’s move to tax crypto gains.

The research carried on 500 respondents aged 18 years upwards by local research firm Realmeter showed that 53.7% of respondents support the proposed taxation regime scheduled to come into effect in Jan. 2022.

38.3% of responders feel it could hamper the sector’s growth, saying the move was biased.

The survey showed that respondents within the age bracket of 20 and 29 were strongly against the planned taxation more than any other age group.

47.8% of respondents in their 20s said they do not support crypto taxation, while 47.5% of respondents said it might be necessary to do so.

The data collated also showed that female crypto respondents were more supportive of the taxation scheme than their male counterparts.

Data collated by South Korean statesman Kwon Eun-hee showed that crypto investors in their 20s and early 30s were the most active participants with over 2.35 million confirming that they have traded digital currencies at least once in the top four crypto exchanges operating in the country: Bithumb, Upbit, Korbit, and Coinone.

But despite what may be a growing dissent against Seoul’s plans to regulate the burgeoning industry, Finance Minister Hong Nam-ki believes it’s only fair to tax capital gains on crypto transactions the same way other financial transactions are taxed.

But crypto stalwarts have called for a revision of the incoming tax law. The capital gains tax on virtual currency transactions has been pegged at 20% and will only affect trading profits that surpass the 2.5 million (about $2,234) mark.

South Korea’s Growing Regulations On Crypto

South Korea is determined to regulate its crypto sector. The Asian nation has been working steadily to bring the crypto industry under the purview of the government. It started by outlawing privacy tokens like Monero’s XMR.

It then extended its laws to comprise virtual assets service providers (VASPs), including cryptocurrency exchanges stipulating a hefty fine for any crypto company that fails to report suspicious transactions on its platform. It also said that failure to keep relevant customer data and separate management of customers’ transaction records would see them facing the full weight of the law.

These laws have since seen crypto exchanges like OKEx and Binance close shop in the country.

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Author: Jimmy Aki

MasterCard Survey Reveals Users Interest In Purchasing Cryptocurrencies

Payment giant MasterCard has disclosed in an online survey that more people are considering using cryptocurrency for payments of goods and services.

40% Plan To Use Crypto Next Year – MasterCard

The company had polled 15,569 consumers across 18 countries, and 40% of this group plan to use crypto in the next year.

Millennials seem to be more interested in digital currencies.

67% said they were more open to using the technology than they were a year ago, 77% of this group want to learn more about them, while 75% are open to using it if only they understood it better.

The survey was conducted from February 26 to March 10, with consumers in four regions, including North America, Latin America, and the Caribbean, the Middle East and Africa, and Asia-Pacific.

According to MasterCard, no less than 500 respondents in five of the 18 countries and at least 1,000 in the other 13 were contacted by the Harris Poll and Mastercard’s research team.

Apart from cryptocurrency, MasterCard also disclosed that people also voted their interest in biometrics, contactless, and QR codes as a means of payment.

According to the company, people are comfortable with emerging payment technologies and would support services that require them to use less physical cash.

With connections across more than 210 countries, MasterCard is undoubtedly a global technology company in the payments industry. It was first founded 55 years ago in 1966 as Interbank Card Association but was later changed to MasterCard in 1979.

MasterCard Pushing Crypto Frontier

MasterCard has been contributing to the crypto industry for a while now. The payment company was one of the first firms to support cryptocurrencies on its payment network.

Recently, it signed a partnership with crypto exchange Gemini to help launch its cryptocurrency rewards credit card. The credit card would offer crypto cashback to Gemini customers every time they shop with it.

The payment network also has an interest in aiding governments to achieve their CBDC goals. Last year, MasterCard launched a platform that allows central banks to analyze digital currencies. The platform was introduced to facilitate an environment where fintech, banks, and consumers can partner to issue, distribute, and exchange digital currencies.

Earlier in February, MasterCard collaborated with the Bahamas government, which provided the citizens with the option of loading the country’s CBDC onto a prepaid MasterCard.

Now, the company is looking into exploring smart contract technology on central bank digital currencies (CBDC).

MasterCard said it was examining how smart contracts can help central banks worldwide develop digital cash and push towards the realization of state-backed currencies. It is reportedly already in talks with China to explore wider cross-border usage of the digital yuan. Mastercard is awaiting final approval for licenses to start onshore card business.

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Author: Jimmy Aki

ECB Survey: 43% Of Respondents View Privacy As A Critical Ingredient For A Digital Euro

ECB Survey: 43% Of Respondents View Privacy As A Critical Ingredient For A Digital Euro

Weeks after European Central Bank (ECB) boss Christine Lagarde mentioned the bank’s intentions to conduct a public forum; the ECB has released its findings.

Privacy Is Uppermost On Europeans’ Minds

The press release made on April 14 was able to highlight some of the key requirements of a central bank digital currency (CBDC).

The public consultation, which began in October 2020 and ended on January 12, 2021, received a record number of responses. According to the ECB, 8,200 responses were filed with private citizens and professionals participating in the exercise.

The report noted that private individuals accounted for 94%. The remaining were made of professionals, including banks, payments service providers, and merchants.

The country with the most participants was Germany (47%), followed by Italy (15%) and France (11%).

The majority of the participants highlighted privacy as a major feature they would like to have on the upcoming digital euro. 43% of respondents called for this. This was followed by security at 18%, the ability to make payments in EU member states was 11%, and with no additional costs at 9%. Offline usability took the rear, with 8% of respondents asking for this.

According to the ECB Executive Board member Fabio Panetta, a digital euro will only be successful if it meets the needs of Europeans. Panetta assured all participants that the public consultation would serve as a guideline for the digital euros exploration.

CBDCs Tools For Government Surveillance

In a previous conversation, ECB boss Christine Lagarde had revealed that the process from adoption to the launch of a digital Euro could take up to four years.

CBDCs are a hot topic following the recent surge in private cryptocurrencies’ prices. With many countries clamping down on crypto assets, some national banks actively explore the potential of a state-sanctioned digital currency to combat the extinction of fiat.

The People’s Bank of China (PBoC) has become a major force in the CBDC race after launching pilot tests in several Chinese cities. Other national banks like the Swiss Riksbank are also considering a digital krona called the e-krona.

Despite what many consider a necessity to combat volatility associated with cryptocurrencies, critics of CBDCs have said that they are just tools for more government surveillance. This has led to some countries like the US stalling in their CBDC program until they have a solution for users’ privacy concerns.

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Author: Jimmy Aki

9% of 16-Year Old Americans, Mainly Male, have Traded Cryptocurrency: Survey Reveals

9% of 16-Year Old Americans, Mainly Male, have Traded Cryptocurrency: Survey Reveals

9% of teens claim to have traded cryptocurrency, reveals the latest survey by Piper Sandler.

The Generation Z survey of more than 7,000 U.S. teens with an average age of 16.1 years further revealed that a good majority of these crypto traders, 81% are male.

The survey didn’t share any other insight into which cryptos were favored among the teens or if they are still holding it or just buying and selling.

It is somewhat possible that these teens might be partaking in the burgeoning sector DeFi given that centralized cryptocurrency exchanges follow strict KYC measures. As we have seen in the crypto, especially the decentralized finance sector, the younger generation is taking the reins and has also been involved in the building process.

Out of these teens surveyed, 33% of them hold a part-time job, the same as in the fall of 2020, with parents contributing 61% in the spending. However, “self-reported” spending improved 1% to $2,165.

Food accounts for the number one priority of teens at 23% share of their wallet. In the aftermath of the pandemic, 46% of teens believe the economy is getting worse, while 25% believe it is getting better.

Cash, however, is the king as the top payment method for teens, unlike the worldwide trend of cashless. Cash is followed by Apple Pay, with Venmo being the most used payment app.

When it comes to favorite social media platforms, Snapchat is a favorite among the teens with 31% share followed by TikTok (30%) and Instagram (24%, down 700 bps Y/Y).

As we saw in the past few months, TikTok was also popular among newbie crypto investors, with people shilling cryptocurrencies, especially Dogecoin (DOGE) on the platform, sending its prices closer to $1.

With more and more crypto companies now investing in growth marketing, FTX sealing the deal with Miami Heat and Coinbase planning for sales and marketing to be between 12% and 15% of net revenue in 2021, these insights and social media platforms may help crypto firms bring in the masses and targeting the younger generation to the industry.

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Author: AnTy

Bitwise Survey: Financial Advisors Expecting Bitcoin To Hit $100k By 2025 Increases By 275%

Bitwise Survey: Financial Advisors Expecting Bitcoin To Hit $100,000 By 2025 Increases By 275%

Over 17% of financial advisors with no crypto investments say their clients will definitely (2%) or probably (15%) invest in digital coins in the coming year.

According to a Bitwise Invest and ETF Trends report, “Benchmark Survey of Financial Advisor Attitudes Toward Crypto assets 2021,” there is a rising interest in cryptocurrencies this year from financial advisors and their clients. In December 2020, the survey was completed by nearly 1000 eligible respondents ranging from independent registered investment advisors (RIAs), broker-dealer representatives, financial planners, and wirehouse representatives.

The 300%+ spike in Bitcoin price to new all-time highs caused a spike in the number of retail and institutional investors willing to take up crypto in their portfolio. The current number of advisors allocating their clients’ funds in crypto rose over 49% in 2020, from 6.3% to 9.8% this year.

17% of financial advisors who have never invested in crypto before are looking at getting into digital assets – 15% of them “probably” and 2% “definitely” allocating funds to crypto in 2021.

The biggest motivation for financial advisors to add cryptocurrencies in their portfolio is the low correlation these digital assets have to other assets – helping in diversification. Over 54% of the advisors stated this as the main reason to invest in cryptocurrency. A further 25% chose hedging of inflation as their reason to invest in cryptocurrencies in 2021, up from 9% in 2020.

The surveyed financial advisors also said they were facing a significant uptick in client questions on the crypto space. Over 80% of the financial advisors stated they had received a question from clients on the crypto space in the past year, increasing from 76% last year.

According to the survey, nearly 75% of the financial advisors thought their clients could be investing in crypto outside of their relationship – 36% stating some or all of their clients were investing in crypto alone and 38% reporting they didn’t know if they were investing or not. Only 26% of the surveyed financial advisors stated they were confident that their clients were not investing in crypto, dropping from 28% in 2020 and 35% in 2019.

The financial advisors are also increasingly getting massively bullish on Bitcoin’s price in the coming year as 15% of them expect BTC to hit $100,000 in the next five years. This represents a 275% increase from the 4% recorded last year. Notwithstanding, the number of advisors that expect the price of Bitcoin to plummet to zero in the same timeframe has significantly dropped from 8% to 4% in the past year.

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Author: Lujan Odera

Financial Firms & Law Enforcement Find Cryptocurrencies More Risky Than Opportunistic: Survey

Financial firms, government, and the private sector all see cryptocurrencies as risky, found a survey by the Royal United Services Institute think-tank and the Association of Anti-Money Laundering Specialists on Tuesday.

About 60% of respondents said cryptocurrencies were a risk rather than an opportunity with illicit usage the main concern.

The survey that maps out mainstream global views towards cryptos suggests an uphill struggle for the industry to achieve wider acceptance. Countries across the world are still grappling with how to regulate cryptocurrencies with the EU planning to introduce new rules by 2024.

The survey was based on over 550 responses from law enforcement, financial watchdogs, financial institutions, and legal and insurance firms along with the cryptocurrency industry.

Nearly 90% of respondents from financial firms said they were worried about digital currencies being used to launder money, while more than 80% are concerned about their usage to circumvent the financial system.

“All respondents accept that cryptocurrencies are vulnerable to criminals,” the survey’s authors said.

While the mainstream views about crypto are still marred by the potential criminal usage of crypto, according to blockchain analysis from Chainalysis, it is as low as 1% of all transactions. Not to forget the fact that major banks, including JP Morgan just recently, in one of its many over the years, have been involved in the illicit usage of trillion dollars and precious metal manipulation.

Only a fifth of respondents said they viewed cryptocurrencies as an opportunity, with one of the potential benefits cited was the extended access to financial services, the research found.

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Author: AnTy

Survey Suggest 40% of Yield Farmers Can’t Read Smart Contracts; Still Pulling 500% Returns

A recent survey from Coingecko revealed that almost half of the DeFi yield farmers couldn’t read the smart contracts of the project they join. A majority of these yield farmers depend on auditors to monitor the security aspects of the project.

The survey revealed that 40% of the yield farmers could not read the smart contracts of the project they joined in; the report also revealed that the defi yield farming is dominated by males with 90% representation. It further showed that despite these yield farmers not able to read or understand the project, they still managed to make hefty profits; in fact, 90% of the respondents said that they had made a 500% return or more.

Yield Farming Dominated By Limited Users

The Coingecko survey found 1,347 respondents, out of which only a minor 23% of the respondents had participated in some of the yield farming, despite more than 80% being aware of the trend.

However, the most surprising aspect of the survey was that almost half of the respondents never read the code or researched about the projects they were participating in. This is extremely troubling, given the hype around the defi space. This trend could lead to a number of major scams arising; similar to the ICO era of 2017.

Coingecko, in its statement, noted that,

“All farmers should conduct their research before farming in any pools, as there are more copy-paste yield farming tokens that could potentially expose them to a greater risk such as code vulnerability or scams.”

Decentralized Finance (DeFi) has been the trend of the crypto town in 2020, where its market cap grew from a few million to over $15 billion in just nine months, and more defi projects have debuted given the rising hype around the space. People joining the hype wagon is understandable, but one should be aware of the risk factor involved. In fact, in the past couple of months, many meme defi projects have launched, managed to raise millions, see it’s market cap grow into billions, and make an exit scam.

All this happened in a matter of a few days.

The Coingecko survey report suggested that astonishing returns like the current times might fade away from the defi space as the hype fades out, but some projects would still allow for it to garner attention.

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Author: Rebecca Asseh

FCA Survey Estimates 1.9 Million People Currently Own Cryptocurrencies in the UK

According to a recent survey by the Financial Conduct Authority (FCA), which is working with the Government and the Bank of England, as part of a UK Cryptoassets Taskforce, more and more people are now aware of cryptos and getting into them. The survey states,

“We estimate 3.86% of the general population currently own cryptocurrencies. This amounts to approximately 1.9 million adults with the UK population (over 18) taken to be approximately 50 million.”

It is also estimated that 5.35% (2.6 million people) hold or held cryptocurrencies, up from 3% (1.5 million people) in 2019.

In this latest survey, 73% of adults compared to 42% last year have found to be heard of cryptos. Traditional media and online news are playing a part in this awareness with 28% of adults that were aware of cryptocurrencies had seen an advert.

Meanwhile, 45% of crypto owners have also seen a related advert and 35% of them said it made the purchase more likely. But those influenced were also more likely to subsequently regret the purchase. Crypto owners also understand the risks associated with the lack of protections, but the agency still states,

“the lack of such knowledge among some presents potential consumer harm to consumers.”

Bitcoin & Libra is all we know about

The research was conducted by FCA from 13 to 21 December 2019, with a nationally representative online panel of 3,085 respondents. After screening out those who haven’t heard about crypto, the agency added 483 individuals to the sample who were crypto owners for the “longer questionnaire.”

These crypto owners have a high technical knowledge and it has been found that 75% of them hold under £1,000, roughly $1,230, and half of them hold under £260, nearly $320.

Bitcoin remains the most recognized crypto while Libra, which doesn’t exist yet, 22% had heard about this upcoming stablecoin from Facebook.

Testing the knowledge of cryptocurrency owners it was found 90% conducted some research before purchasing cryptocurrencies, compared to 84% in 2019.

Speculation, Regulation, & Coinbase Domination

The most popular reason for buying cryptos remains speculation – ‘as a gamble that could make or lose money’ rather than as an investment of money.

Those investing for speculation purposes were also more likely to hold their cryptocurrencies for more extended periods. In comparison, those displaying a lack of basic knowledge tend to hold their cryptocurrencies for shorter periods.

While 12% never monitor the value of their holdings, 15% regret having purchased.

Almost 50% of cryptocurrency owners have never used digital assets, but a good 27% did use them to purchase goods and services.

Moreover, 31% of respondents who currently own crypto currently do not intend to purchase more crypto because they consider it too risky. 29% of these will buy more if it is regulated in the future.

Interestingly, 73.2% of consumers that do not currently own but plan to purchase cryptocurrencies in the future reported that the lack of regulatory protection has impacted their decision not to buy cryptocurrencies to date.

Unlike the previous times, this survey found that 8% of respondents used borrowed money to purchase cryptos. But these borrowers were most likely to be the ones displaying a lack of knowledge surrounding the technology underpinning cryptocurrencies or the absence of regulatory protections.

The crypto purchases were made majorly (83%) using only non-UK based exchange, with Coinbase being the most popular one with 63% followed by Binance (15%), Kraken (10%), Bittrex (8%), and Bitfinex (7%).

Also, a good 46% store their crypto on the exchange where they bought it, and only 24% keep it in on offline hardware.

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Author: AnTy

36% of Big Institutional Investors Own Digital Assets While 80% Find them Appealing: Fidelity

36% of large institutional investors own digital assets such as Bitcoin, according to a survey from Fidelity Investments which also runs a service that trades and secures digital assets. Tom Jessop, president of Fidelity Digital Assets said,

“These results confirm a trend we are seeing in the market towards greater interest in and acceptance of digital assets as a new investable asset class.

This is evident in the evolving composition of our client pipeline, which spans from crypto native funds to pensions.”

Investors in Europe are more likely to own digital assets

Across the US and Europe, a third of the survey’s 774 respondents said they own cryptocurrencies or derivatives. In Europe, 45% of institutions — including pension funds, investment advisers, family offices, and hedge funds are invested in digital assets.

In the US, only 27% of the surveyed 393 institutions said they own digital assets. Interestingly, 59% of these US investors are invested directly and only 22% have done so via futures. Although just over half of Europe’s, interest investors in the US has increased from 22% a year ago. “Europe is perhaps more supportive and accommodating,” said Jessop which could

“be just things going on in Europe right now, you got negative interest rates in many countries. Bitcoin may look more attractive because there are other assets that aren’t paying return.”

Bitcoin continues to be the digital asset of choice

The survey was conducted by Greenwich Associates between November 2019 and early March, right before the market crashed.

Over a quarter of the respondents hold Bitcoin while only 11% are holding Ether. In 2020 so far, Bitcoin is up 32% while Ethereum has gained 86%. After tumbling during the COVID-10 pandemic triggered sell-off, crypto assets have rallied.

Besides price, the survey also noticed that over the last year, there have been incumbent service providers and increasing coverage by the mainstream financial firms, all of which contribute to the upward trend seen in institutional investors’ digital asset ownership.

Volatility the main concern impeding adoption

There is still a lot of scope for growth here as almost 80% of investors surveyed find something appealing about the asset class.

Interestingly, while 25% of European investors find the fact that certain digital assets are free from government intervention to be appealing, only 10% of investors in the U.S. feel this way.

91% of those open to exposure to digital assets in the next five years expect to have at least 0.5% of their portfolio allocated to them.

The majority of institutional investors feel digital assets have a place in their portfolio while 40% believe it to be an alternative asset class and 20% as an independent asset class.

The survey found that price volatility was the top concern followed by market manipulation and lack of fundamentals to gauge appropriate value hindering digital assets’ wider institutional adoption.

But according to Jessop, these issuers are largely those that will “resolve themselves as the market infrastructure evolves.”

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Author: AnTy