In May, the US Federal Reserve released its 2022 annual report on the economic well-being of American households. A section dedicated to cryptocurrencies shows a higher proportion of the poorest using cryptocurrency for retail or P2P payments, although the overall numbers remain low.

The survey asked people if they used crypto for payments versus investments. Among the lowest income group with income below $25,000, 9% of respondents used cryptocurrency for any purpose. The group split into a 4% who use it for payments and a 5% who see cryptocurrency as an investment. In other words, 44% of the low-income crypto group use it for payments.

In contrast, only 16% of the wealthiest cryptocurrency holders said they made a cryptocurrency payment.

Unsurprisingly, the same pattern was repeated for the unbanked. Five percent of unbanked adults use cryptocurrency for payments, compared to 3% of those with bank accounts. Eight percent of people who use non-bank check cashing or money orders use crypto to send money, compared to 2% of those who don’t.

There were also significant variations in usage based on ethnicity. Half of those who identified as black cryptocurrency owners used cryptocurrency for payments, compared to a third of Hispanic cryptocurrency users, one in five Asians, and 11% of whites.

However, the Fed added that “the use of cryptocurrency for financial transactions remained very low, even among groups most likely to use cryptocurrency in this way.”

Low crypto holdings, but no use of payments

Overall, the share of households using cryptocurrency for any reason dropped from 12% in 2021 to 10% in 2022. However, the decline is purely related to holding cryptocurrency as an investment. The use of retail or P2P payments increased a bit.

The top three motivations for using crypto for transactions were that the recipient preferred it, it’s faster, and for privacy. They each got 20% or 21% of crypto payment users.

Thanks to BaFin’s Christoph Kreiterling for highlighting the report on social media.