Why are Crypto Holders Worried of Declaring Their Ownership?

Why are Crypto Holders Worried of Declaring Their Ownership?

Cryptocurrencies have been popularly regarded as the future of finance globally. Investing in virtual coins has become a lot easier than it was a few years ago with the evolving crypto industry. Over the last few years, Bitcoin has caused a lot of buzz in the market. It has established itself as the de facto standard of cryptocurrency. The rapid rise in cryptocurrencies certainly drew the attention of many individuals and retail investors. But a lot of primary surveys argued otherwise. Many of the researchers who wanted to prove this boom were not successful in doing so.

This research aims to explore if people are trying not to disclose their cryptocurrency ownership. If proven so, this study would delve deep into the rationale behind these investors who are not disclosing their crypto ownership. As it is hard to get the exact numbers in the Crypto industry because of its anonymity nature, only secondary sources were considered for analysis in this study.

Who Owns Bitcoin? – The World’s Largest Crypto

Before we get into the core objective of the study, here are some facts based on secondary research about the ownership of cryptos.

Crypto holders and stocks infographic
Cryptocurrencies vs other investments

To analyze this better, we segregated the general population into groups based on defining characteristics that could directly influence the ownership of cryptos.


It is hard to determine the actual amount transmitted and received by address in a specific country because of the decentralized structure of cryptos. However, by measuring the crypto activities on every platform and segregating them by country, it is possible to estimate the corresponding geographical activity.

The below snapshot represents the Global Crypto Adoption Index of the top 10 countries based on reliable research done by Chainalysis.   

geography of crypto
Chainalysis: Geography of Cryptocurrency

The key findings of this study:

  • Out of 154 nations, only 12 countries received a 0-index score.
  • This shows the promise in cryptocurrencies as both – 1. an investment and a method of storage of value and 2. a medium of exchange, especially in developing countries.
  • Venezuela is a great real-life example of how Bitcoin is being adopted in underdeveloped countries. Citizens of this country use it as a shield against economic turmoil.
  • The existence of P2P platforms plays a significant role in the ownership of Bitcoin. With P2P platforms, the users will not have many regulations, and they won’t have to connect to banking.

Age Group and Financial Literacy

This aspect refers to the Bank of Canada’s omnibus survey report to understand if there is any possible correlation between age group, financial literacy, and crypto ownership.

  • Crypto Ownership amongst high school students declined from 3.7% to 2.3%, while Canadian university students gained ownership by 6.7% to 9.1%.
  • 7.3% of people with low-level literacy owned cryptocurrency, whereas only 4.1% of Canadians with high financial literacy invested in cryptos.
  • That results in an intriguing conclusion because individuals with strong financial skills are likely to know about Bitcoin and accept it less.
  • The study conducted by security.org throws some more light on the relation between age groups and crypto ownership.
  • The study conducted by Panos, G. A., & Karkkainen, T. (2019) about Financial Literacy and Attitudes toward Cryptocurrencies further asserts the same and backs their assertions with data. They suggest that financially literate people will also not be willing to buy Bitcoins even in the future.
crypto ownership
Crypto Ownership by Age Group

Investor Type

  • A study conducted by Copper.Co had found that most of the cryptocurrency owners (especially Bitcoin) were long term investors.
  • According to CoinMarketCap.com, around 18.625 million Bitcoins were generated or digitally mined, but a significant amount of these was destroyed. According to their calculations, the breakdown is as follows, 56% of bitcoins belong to investors, 18% lose, 15% to so-called traders, and the others have still to be exploited. 
Types of crypto investors
Copper.Co: Types of crypto investors

Reasons Why the Majority of Public Tend to Own Cryptos

The study “Ownership and purchase intention of crypto-assets” by Helmut Stix would be referred to get insights for this analysis.

  • Surveys in the study show that ownership and purchasing intentions are highly linked to expectations on investment returns. 
  • This study also found out that looking at the risk attitudes, owners are more risk-tolerant and do not consider the short-term volatility as they tend to own it for longer terms.
  • Distrust in traditional banking establishments also exhibits a positive correlation with purchase and ownership intentions amongst the people surveyed.
  • ‘Speculation’ was one of the significant factors identified regarding why people hold crypto. This study found out that people own crypto as they speculate that the coin’s value would multiply in the future.
  • The transaction was also a motif behind people wanting to own cryptocurrency, as this could provide them with extra benefits than traditional banking systems.
  • It was also found out that people who live in underdeveloped countries tend to own cryptocurrencies, where the economy is not stable, and the inflation rates are on the rise.

Ownership of Stocks vs Cryptos in Developed Economies

Even though the name cryptocurrency is being heard more than ever, the research showed that it still has a long way to go to be compared with more traditional forms of investing like stocks. Here is the comparison with the developed countries.

Crypto vs Stockholders in the US

The research showed that over the previous two decades, stock ownership in the US has fallen.

In a 2020 study conducted by Gallup, over 55% of Americans stated that they owned some stock or security. This represents a substantial decline from 2000 when the US stock was owned by 60 percent of the Americans.

Graph of ownership of stocks vs cryptos in the united states

A study conducted by Gemini in 2021 estimates that roughly 14% of the US population own cryptocurrency. This percentage roughly translates to 21.2 million US adults who hold cryptocurrency, and other studies estimate this number to be even higher.

  • 84% is Bitcoin – average owned – $8,512.
    • 27% is Eth – average owned – $10,022.

In Canada

  • 29% of Canadians own stocks, and 43% of Canadians have invested in Mutual Funds.
  • The number of people who own cryptocurrency is comparatively lesser as it only amounts to 4%, which translates to around 1.2 million of the population.
Graph of ownership of stocks vs cryptos in canada

In the UK

  • In the United Kingdom, 33% of the population, which would be around 22 million people, owns stocks.
  • The U.K. is one of the countries where cryptocurrencies look like a direct alternative to stocks. The difference between the percentage of the population who owns stocks and the people who own crypto is very negligible.
Graph of ownership of stocks vs cryptos in the UK

Are Crypto Holders Worried of Declaring Their Ownership?

This is a question that comes to mind after looking at the statistics in these studies and comparing them with the increasing quantity of crypto wallets. The number of these crypto wallets being generated every year and the volume of amounts being traded/held has increased rapidly. Considering these results, one would naturally ponder about the possibilities of crypto holders declaring their ownership. There is a famous quote by Benjamin Franklin, which goes like, ‘In this world, nothing is certain except death and taxes.’ But a few cryptocurrency investors would argue otherwise.

If it is not disclosed by exchanges, companies and other third parties, the IRS may not be able to trace crypto revenue or transactions. According to Jon Feldhammer, a former senior IRS officer and partner at Baker Botts, tax evasion occurs because there are no proper guidelines for reporting something as income.

He also opined that setting up a non-reporting channel would only create a difficult way of evading taxes. As the government controls the currency more closely and takes careful account of it, money spent here will be taxed. However, as more stores accept Bitcoin and other virtual currencies, Crypto is becoming an alternative to cash and these stores might not have strict taxation regulations in place.

When looking at the data, it could be seen that a lot of the young population is edging towards cryptocurrency, and we can expect all of them to know the norms of IRS and to oblige the same. These young adults and teenagers could opt for not reporting their crypto earnings to skip this lengthy process. The same could go with the adults who just want to save more, and they do it by not reporting their crypto holdings.

It is also found out that people are unwilling to reveal these earnings, especially the older population, because of their fear of getting hacked and losing all their money. These attacks have been on the rise ever since the new boom of cryptocurrencies, and this process of hacking a crypto wallet is called ‘Cryptojacking.’

Bottom line

There is no denial in the fact that cryptos have been seeing new heights for a few years. As identified in the study, there are quite a few reasons and demographic factors behind why people own crypto. Our core objective of this study was to identify if people choose not to disclose their cryptocurrency ownership. Even though we did not have any primary research done, we gathered the required data from some of the most credible secondary sources. As a result, we derived a few possible rationales like tax evasion and fear of hacking behind people not declaring their crypto ownership.

Research papers used (PDFs)

1. State of U.S. Crypto Report 2021 (Gemini):


2. The 2020 Geography of Cryptocurrency Report by Chainalysis, September 2020


3. Cryptoassets: Ownership and attitudes in the UK by Financial Conduct Authority – Consumer survey research report March 2019


4. Stix, H. Ownership and purchase intention of crypto-assets: survey results. Empirica 48, 65–99 (2021). https://doi.org/10.1007/s10663-020-09499-x


5. 2018 Bitcoin Omnibus Survey: Awareness and Usage by Henry, Christopher; Huynh, Kim; Nicholls, Gradon; Nicholson, Mitchell


6. Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances, Vol. 106, No. 5


7. Liberty Street Economics


8. US Takeover: Bitcoin’s Available Supply Shifts to Long-Term Investors by Copper.co 2021


9. 2018 Bitcoin Omnibus Survey: Awareness and usage


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