Retail Investors Embrace Crypto Despite Market Volatility: IOSCO Report

Crypto ownership among retail investors has surged in recent years, according to a recent report from the International Organization of Securities Commissions (IOSCO). The report highlights that even amid significant market fluctuations, interest in cryptocurrency remains strong.

In a survey of 24 jurisdictions, 15 reported that up to 10% of retail investors owned crypto by last year, while six jurisdictions indicated that ownership levels reached 30% or more. This marks a substantial increase from 2020, when half of the jurisdictions estimated that only 1% to 5% of investors owned cryptocurrencies.

IOSCO noted, “Since 2020, the crypto-asset landscape has evolved considerably.” Despite the downturn experienced during the 2022 "crypto winter," retail investors across both advanced economies and emerging markets continue to engage with the crypto market.

The report underscores ongoing risks and challenges in the crypto space, including market volatility, insufficient investor understanding, a lack of regulations, and the prevalence of scams and fraud. Many of these concerns echo those raised in IOSCO's 2020 report.

In light of the increased risks, the organization emphasizes the necessity for enhanced investor protection and educational initiatives. The past four years have seen notable incidents of high-profile failures, a lengthy bear market with indexes dropping 73% from peak values, and a rise in scams and hacks, alongside intensified regulatory actions.

Despite these challenges, retail investors remain enthusiastic about crypto assets. Numerous surveys and studies over recent years have shown a growing interest, particularly among new investors.

The report highlights demographic trends, noting that younger individuals—especially those under 40 and predominantly male—are more likely to invest in cryptocurrencies. In the U.S., nearly 60% of investors under 35 have considered crypto investments, with over half having already invested. Among the Gen Z demographic (ages 18 to 25), about 44% began their investment journeys with cryptocurrencies.

IOSCO points out that new investors are more inclined to explore crypto than their more established counterparts. The primary motivations driving these investments include fear of missing out (FOMO), speculative opportunities, low entry costs, and recommendations from friends and social media influencers.