A new study by the Ontario Securities Commission has found that while five percent of Ontarians (approximately 500,000 people) own cryptocurrencies such as Bitcoin and Ether, many of those Ontarians don’t understand enough about them.
The study, titled “Taking Caution: Financial Consumers and the Cryptoasset Sector,” includes findings from an online survey of 2,667 Ontario residents between March 14 and March 22. The study included an oversample of 1,506 men aged 18 to 24 because, the report said, this group is more likely to own cryptoassets than any other demographic. The findings were weighted by age, gender, and region using the latest Statistics Canada Census data.
“Over the past 12 months, Bitcoin, digital tokens, and other cryptoassets have captured significant public attention,” the study reads. “This report, prepared by the Investor Office of the Ontario Securities Commission, sheds light on financial consumers’ views on and understanding of cryptoassets, as well as the attitudes and behaviours of cryptoasset owners.”
The OSC study revealed that 46 percent of Ontarians who own a cryptoasset said they acquired cryptoassets out of interest in new technologies, while 42 percent said they acquire cryptoassets with the hope of making a profit by selling them at a higher price later. The study indicated that 18 percent acquired a cryptosset because of blockchain technology’s potential to prevent loss and fraud.
“It’s important that investors understand the potential risks and characteristics of purchasing a cryptoasset product.”
When it comes to spending, the survey suggested that most people aren’t spending huge amounts of money on cryptocurrencies and other digital assets, with just over half saying they spent less than $1,000 or no money at all to acquire them. However, nine percent of Ontarians surveyed reported spent more than $10,000 or more acquiring cryptoassets, with the majority of them owning Bitcoin (65 percent) or Ether (35 percent).
While many Ontarians are investing in some type of cryptoasset, the study suggested that many investors lack deep understanding about the assets they are investing in, which can ultimately expose them to different risks. Specifically, the findings suggested that rising investor protection concerns relate to volatility, transparency, valuation, custody, and liquidity.
In May, the OSC issued a warning against firms that it said are not registered to provide advice on investing in securities in Ontario.
These concerns are heightened as many Ontarians who have acquired cryptocurrencies through a trading platform report that they are experiencing issues including a halt in trading, problems with withdrawing money from their accounts, problems transferring money into their trading platform accounts, and not understanding the fees they are being charged.
“It’s important that investors understand the potential risks and characteristics of purchasing a cryptoasset product,” said Tyler Fleming, director of the investor office at the OSC. “We want to remind Ontarians to ask questions and read disclosure documents carefully to know what they are investing in.”
Overall, the study’s findings suggest that many Ontarians are approaching cryptoassets with caution. “A relatively small percentage of Ontarians owns cryptoassets, and those who do tend to spend relatively small amounts buying them and fund their purchases with cash savings rather than debt,” the report reads. “The reasons cryptoasset owners gave for purchasing cryptoassets also suggest that many are entering the sector largely out of curiosity, or interest in cryptoassets’ practical use as a payment mechanism, rather than as a way to get rich quick.”