Crypto ownership among retail investors has surged over the last four years, even amid market volatility, according to a recent report from the International Organization of Securities Commissions (IOSCO). The global regulatory body highlights the need for more investor education as digital assets gain popularity.
Rise in Crypto Adoption Among Retail Investors
The IOSCO report, published on October 9, shows that in 2022, 15 out of 24 surveyed jurisdictions reported that up to 10% or more of their retail investors held cryptocurrencies. Additionally, six jurisdictions revealed that 30% or more of their investors were engaged in crypto investments. This is a significant jump compared to 2020 when half of the jurisdictions estimated only 1% to 5% of their retail investors owned crypto.
“Since 2020, the crypto-asset landscape has developed rapidly,” IOSCO noted. Despite the market downturn during the 2022 “crypto winter,” retail investors across both advanced economies and emerging markets continue to show interest in digital assets.
Ongoing Risks and Concerns in the Crypto Market
IOSCO expressed concerns about several risks tied to the crypto market, such as price volatility, lack of investor understanding, insufficient regulation, and the prevalence of scams and fraud. These concerns remain consistent with those highlighted in its 2020 report. The organization stressed the need for greater investor protection measures and education to mitigate these risks.
Since 2020, the crypto market has faced numerous challenges, including major platform failures, bankruptcies, and a significant bear market that saw prices drop by 73% from their all-time highs. Alongside these issues, scams, hacking incidents, and substantial investor losses have surged, prompting increased regulatory and enforcement efforts globally.
Younger Investors Lead Crypto Adoption
Despite these challenges, IOSCO reported that retail interest in cryptocurrencies continues to grow. “Over the last four years, various surveys and studies have shown a rising interest, particularly from new investors, in crypto-assets,” the report stated.
The data indicates that most retail crypto investors are young, with a majority under the age of 40 and predominantly male. In the United States, for instance, nearly 60% of investors under 35 have considered investing in cryptocurrencies, and more than half have already done so. Additionally, around 44% of Gen Z investors (ages 18-25) began their investing journey with cryptocurrencies.
The report also found that newer investors are more inclined to invest in digital assets than those with more experience in traditional markets. Key motivations for entering the crypto space include fear of missing out (FOMO), speculation, low entry costs, and recommendations from friends or social media influencers.
Given the rapid growth and ongoing risks within the crypto market, IOSCO emphasized the importance of developing stronger investor protection strategies and providing education to help retail investors navigate this evolving space safely.
