Who’s buying crypto in Canada, and why?

The survey by the Ontario Securities Commission found that 13% of Canadians currently hold digital assets such as cryptocurrency (think bitcoin or ethereum) or non-fungible tokens (NFTs). While that might seem like a small minority, more than double that amount intend to buy the assets this year, as mentioned above. Younger Canadians (aged 18 to 34), men, people with a household income of $100,000 or more, and those who had seen crypto ads were more likely to say they intended to buy.

Among survey respondents, many of those who hold crypto assets learned about them from friends, family or colleagues, followed by social media influencers and/or experts in blockchain technology (the decentralized digital ledgers that record crypto transactions).

Traditional institutional investors and financial services firms have started to adopt crypto assets, mostly indirectly, such as through ETFs. Some examples are Fidelity’s Advantage Bitcoin ETF and the bitcoin and cryptocurrency ETFs available from Horizons ETFs. The Ontario Teachers’ Pension Plan recently revealed that it had invested $95 million—0.05% of the plan’s assets—into the now-struggling cryptocurrency exchange FTX.

The survey was conducted online from April 26 to May 10, 2022. It included 2,185 respondents from the general population plus 175 additional crypto owners, in order to have at least 500 crypto owners participating.

What are Canadian crypto investors buying?

Of the 13% of Canadians who already own crypto assets, 6% hold crypto assets, 6% own both crypto assets and crypto funds, and 2% own crypto funds only. Crypto funds are securities like exchange-traded funds (ETFs) that either invest only in cryptocurrencies or blockchain technology, or invest in crypto along with traditional stocks and bonds. Crypto assets include bitcoin, ethereum, stablecoins and other altcoins, and NFTs.

Do Canadians know enough about crypto?

In their report, the survey authors noted that “the fast-paced rate of innovation has underlined the need to better understand Canadians’ experiences with crypto trading platforms, advertising, and decentralized finance.”

So, is our level of knowledge keeping up with the rapid changes in the industry? Overall, “Canadians’ working knowledge of crypto assets was low,” the survey authors noted. Respondents completed a six-question knowledge test about crypto’s practical, legal and regulatory aspects, and the average score was just 37%. Only 1% of those surveyed answered all six questions correctly; less than 25% got four or more right. 

Current crypto owners had a higher average score than the general-population group (61%) on the crypto knowledge questions, as well as on four general financial literacy questions.

How’s your crypto literacy?

Here are the questions asked in the survey. Test yourself too! Find the answers at the bottom.

1. What is the definition of crypto assets?
   a. Crypto assets are a body of private information about an individual, organization or electronic device that exists online.
   b. Crypto assets are purely digital assets that use cryptography—the writing or solving of codes—peer-to-peer networks, and distributed ledger technology (such as blockchain) to create, verify and secure transactions. They can be transferred, stored or traded electronically.
   c. Crypto assets are a dedicated website or application which enable users to communicate with each other by posting information, messages or images and thereby create a digital currency of value.
   d. I don’t know.
   e. I’ve never heard of crypto.
2. True or false: Crypto assets allow for direct transactions between two parties, without a third party involved.
3. True or false: Crypto asset transactions take place instantaneously.
4. True or false: All crypto asset transactions are recorded on a distributed ledger that is publicly accessible.
5. True or false: Crypto assets are secure from cyberattacks.
6. True or false: Crypto assets are backed by the government.

Who’s buying crypto, and how did they get it? 

Demographically speaking, “Crypto asset or crypto fund owners were more likely to be men, aged between 25 to 44, have children, be employed full time, and have attained a higher level of education,” the survey authors wrote in the report.

Crypto asset and crypto fund holders were more likely to already be investors (87%), many of whom were self-directed (44%). Those who only owned crypto funds were more likely to use an online investment service or robo-advisor.

Nearly half (48%) of those who owned crypto assets or funds considered their investment approach aggressive, whereas the majority of Canadians (56%) in the general-population group saw themselves as conservative investors. 

Crypto owners were more likely than non-owners to have received promotional texts and offers, and to recall seeing ads for crypto platforms. 

To buy crypto, more than half (52%) of crypto owners said they use trading platforms such as Wealthsimple, Coinbase or CoinSmart. A much smaller percentage (19%) had acquired the assets from friends, family or colleagues, while others used crypto mining or staking, or they received crypto for free.  

Why do crypto holders decide to buy?

From the survey, the top reasons why survey respondents bought crypto assets or funds included:

• A belief in crypto technology
• Wanting a “speculative investment or gamble”
• Looking to grow their savings more than they would in a traditional account
• A desire to diversify their portfolio 

Those who have never owned crypto assets listed the following reasons for deciding not to buy:

• Worrying about not understanding the asset well enough
• Concern for potential fraud or scams
• Crypto investing is too risky or similar to gambling 
• Concerned about volatility

Beware the risks of crypto investing

While crypto can have a lot of upside potential, it’s also a high-risk, high-volatility, speculative investment. It also carries a wide range of other risks, including technology, regulatory, liquidity and fraud risks. 

At MoneySense, we caution investors to do their own research, to consider whether crypto fits with their long-term financial goals, and not to invest more than they can afford to lose. 

Quiz Answers

1. Crypto assets are purely digital assets that use cryptography—the writing or solving of codes—peer-to-peer networks, and distributed ledger technology (such as blockchain) to create, verify and secure transactions. They can be transferred, stored or traded electronically.
2. True
3. False
4. True
5. False
6. False

Go back to test.

Read more on crypto:

• Watch: Is crypto a good investment?
• Which cryptocurrency should I invest in?
• 10 common crypto scams and how to avoid them
• How long should you hold a cryptocurrency investment?

About Margaret Montgomery

Margaret Montgomery is a former MoneySense editorial assistant and MoneyFlex columnist. She studied business administration at Wilfrid Laurier University and journalism at Centennial College.

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