The European Central Bank (ECB) released a report on Tuesday, May 24, that stated that one in ten households in the Eurozone owns crypto-assets such as Bitcoin. However, the wealthy are marginally more likely to hold them than the poor.
In a pre-released chapter of its Financial Stability Review, the ECB stated that recent volatility has not been contagious to the rest of the worldwide financial system. Still, the threat is increasing as institutional investors get more involved.
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Cryptocurrencies are becoming more and more popular, with retail investors making up a large part of the investor base.
The report explains;
Recent results from the ECB’s Consumer Expectation Survey (CES) for six large Euro area countries indicate, based on experimental questions, that as many as 10% of households may own crypto-assets.
Wealthiest Holds The Most Crypto-assets
The ECB’s Consumer Expectation Survey found that an average of 10% of the households in the six countries where the poll is conducted own crypto-assets, ranging from 6% in France to 14% in the Netherlands.
Around 37% of respondents reported owning up to 999 Euros ($1,065) worth of crypto, with 29% holding between 1,000 Euros and 4,999 Euros and 13% between 5,000 Euros and 9,999 Euros. However, the rest had invested more than that.
The wealthiest 20% of respondents were most likely to own cryptocurrencies. Although a more significant number of families with lower incomes reported holding more cryptos than those in the middle ground.
As per the survey;
On average, young adult males and highly educated respondents were more likely to invest in crypto-assets in the countries surveyed. With regard to financial literacy, respondents who scored either at the top level or the bottom level in terms of financial literacy scores were highly likely to hold crypto-assets.
The ECB has said that the assets in question were not appropriate for the vast majority of ordinary investors. The ECB encouraged the European Union authorities to “urgently” establish new laws governing crypto assets.
The ECB added;
As this is a global market and therefore a global issue, global coordination of regulatory measures is necessary. Based on the developments observed to date, crypto-asset markets currently show all the signs of an emerging financial stability risk.
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The European Central Bank believes that due to the massive development in both size and complexity of crypto markets, this industry threatens the nation’s overall financial stability and urgently requires regulation.
Christine Lagarde, President of the ECB, has been quite clear about her perspective on the value of crypto-assets:
I have said all along the crypto assets are highly speculative, very risky assets. My very humble assessment is that it is worth nothing. It is based on nothing, there are no underlying assets to act as an anchor of safety.
Featured image from Pixabay, and price chart from Tradingview.com