IRS Saw 149% Increase in Retail Crypto Investors

About 2.3 million Americans traded cryptocurrencies in 2020, a 149% increase from the previous year.

That’s according to a Bloomberg News report, citing data from the IRS. In 2019, the report said, almost 928,000 taxpayers said they received, sold, sent, or otherwise acquired digital currency.

The report also notes that these figures illustrate the popularity growth of crypto before this year’s market downturn and how much exposure retail investors could be facing as platforms such as FTX collapse.

That platform’s implosion this month has led to more calls — from officials in the U.S. and overseas — for market regulation to protect investors.

And in one case, it even led to an outright denunciation of the industry, from Federal Reserve Bank of Minneapolis President Neel Kashkari, who said on Twitter last week that cryptocurrency has no use and is just a tool for speculators.

His tweet came in response to a news story about how investors were fooled by FTX.

“This is interesting but 2 narrow,” Kashkari said. “This isn’t case of 1 fraudulent company in a serious industry. Entire notion of crypto is nonsense. Not useful 4 payments. No inflation hedge. No scarcity. No taxing authority. Just a tool of speculation & greater fools.”

Meanwhile, Rob Hunter, deputy general counsel and director of regulatory and legislative affairs at The Clearing House (TCH), told PYMNTS’ Karen Webster last week that there’s a fix for the disasters that have plagued the crypto landscape: Bank-issued stablecoins.

Consumers want them. National banks — among the most trusted financial services providers —  have shown a willingness to issue them. But federal regulators are blocking the way.

Ironically, regulators themselves, like the Office of the Comptroller of the Currency in 2020, have long publicly stated that banks have the legal authority to issue the coins. More recently,  the President’s Working Group on Financial Markets issued a report saying that the only appropriate issuers for stablecoins should be insured depository financial institutions.

Since then, however, there’s been virtually no movement.

“The regulators promised a crypto sprint, and really what we’re getting is a crypto slow walk,” Hunter said.