Crypto traders are speculators, not ideologues

While cryptocurrencies are often touted as superior alternatives to the traditional financial system, most people trade them for speculative purposes rather than out of an ideological commitment, suggests a working paper from staff of the Bank for International Settlements (BIS).

The paper, which examines the motivation for owning cryptoassets such as Bitcoin and Ether, concluded that there’s no evidence for the theory that people buy crypto for philosophical reasons, such as a powerful distrust of central banks, fiat currency and traditional financial institutions.

Based on data from the U.S. Survey of Consumer Payment Choice, it finds that “compared with the general population, investors show no differences in their level of security concerns with either cash or commercial banking services.”

The paper’s authors reject the hypothesis that a lack of faith in the financial system underpins crypto ownership. Instead, they conclude that most investors are trading crypto to generate returns.

“Cryptocurrencies are not sought as an alternative to fiat currencies or regulated finance, but instead are a niche digital speculation object,” the paper said.

As a result, the researchers conclude that crypto should be regulated similarly as other assets.

“From a policy perspective, the overall takeaway of our analysis is that as the objectives of investors are the same as those for other asset classes, so should be the regulation,” it said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.