Aussie investors are warming to crypto, despite the lack of clear regulations

Legal uncertainty around cryptocurrency, the fear of losing money and the tax complexities of owning crypto are among the top concerns for crypto and digital asset owners, according to a global survey from crypto exchange Gemini.

Though cryptoassets have had a volatile history, especially over the last five years when their massive price gains have been largely driven by speculation, network effects and a rise in popularity, they have been largely unaffected by traditional market forces. 

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Last year, 41% of crypto owners surveyed globally purchased crypto for the first time, with the highest number of newbies found in India (54%), followed by Brazil and Hong Kong (at 51% each).

Established asset class

Cryptocurrency appears to have evolved from the wild west to a globally recognised asset class, driven by inflation and diversification.

Crypto’s rise was most apparent last year, when the cryptocurrency market capitalisation reached over US$3 trillion for the first time. 

Despite the absence of a clear regulatory framework for the industry, the asset class is catching the fancy of many, including women, according to the survey by Gemini.

“Crypto adoption reached a true tipping point last year, becoming an established economic driver and a valued investment across the globe,” said Gemini chief operating officer Noah Perlman.

“We expect to see the influx of crypto investors continue into this year with concerns about inflation in the US and globally driving interest.

“Education also remains a global barrier to adoption, and providing investors additional resources is key to bringing new users into the crypto ecosystem, especially women who make up a majority of the crypto-curious audience.”

Four out of five US crypto owners, at 44%, bought digital assets in 2021, according to the survey, compared with 41% for all holders worldwide. 

The survey was designed to uncover trends in adoption, barriers to entry, and attitudes toward cryptocurrencies.

Almost 30,000 adults in 20 countries, with a household income of US$14,000 or more, were surveyed online between November 23, 2021, and February 4, 2022.

Australian focus

According to Gemini’s Global State of Crypto report, 2021 was cryptocurrency’s breakout year, especially in Australia, with inflation being a critical factor in adoption.

The survey found that 43% of Australians first invested in crypto in 2021. 

Contrary to other APAC countries, Australia has a lower adoption rate of crypto, at 18% of the surveyed people, compared to western nations.

Over half of Australian crypto investors (at 54%) view cryptocurrency as a good way to diversify their assets, with 81% choosing to hold their crypto investments for the long term.

However, 53% of those surveyed who do not own crypto cited the fear of losing money as a barrier to crypto adoption.

Australian crypto investors also had the lowest female to male ratio in the Asia Pacific region at 27%. 

Gender gap

The survey results showed that the crypto gender gap has narrowed. Among the crypto curious who plan to purchase crypto for the first time in the next year, 47% were women globally.

While women represented half of crypto owners in developing nations — with Israel at 51%, Indonesia at 51%, and Nigeria at 50% — only a third of crypto owners in developed countries and regions in contrast were women.

These include 32% in the United States, 33% in Europe, and 27% in Australia.

Regulation and risk

The majority of respondents surveyed were concerned about the risks posed by cryptocurrencies, even though they recognise the innovation to be disruptive 

Crypto regulation is a global concern, noted the survey, with 39% of non-owners in the Asia Pacific, 37% in Latin America, and 36% in Europe concerned about legal uncertainty surrounding cryptocurrency. 

Additionally, 30% of respondents in the Middle East, 24% in the Asia Pacific, and 23% in Latin America said that tax complications prevented them from investing in cryptocurrency.

Hedge against inflation 

While traditionally, investors have looked to gold and other perceived safe havens such as Swiss francs to protect their wealth from inflation, cryptocurrency enthusiasts have hailed digital currencies as an inflation hedge.

As a safe haven from inflation in central bank currencies, cryptocurrency has long been marketed as invulnerable to inflation. 

In Brazil, where the local currency has been devalued by more than 200% against the US dollar, 41% of respondents own crypto, according to the survey.

Interestingly, respondents in countries that have experienced a 50% or more devaluation of their currency in the last decade were five times more likely to plan to purchase crypto in the next year, according to the survey, which noted crypto appetite was greatest in South Africa, Mexico, India, and Brazil, where respondents plan to buy crypto this year.

Education is necessary

In order to invest in cryptocurrency, the survey showed education remained the greatest barrier to entry. 

More educational resources about cryptocurrency were almost twice as likely to help respondents get started with cryptocurrency as recommendations from friends, according to the global survey.

More than half of Latin American respondents, 51%, and 56% of African respondents, said educational resources would make them more likely to purchase cryptocurrency. 

There were 44% respondents in the Asia Pacific and 42% of respondents in the United States who said the same.

– Amrita Ghaswalla