Development Group: Southeast Asian Consumers Too Bullish on Crypto?

Southeast Asian investors may be too bullish on crypto assets for their own financial good, a new study by the Organisation for Economic Co-operation and Development (OECD) found.

The Japanese government-funded report of Vietnamese, Filipino and Malaysian consumer crypto sentiments found that out of 3,006 respondents, 80 percent were aware of cryptocurrencies while 53 percent reported a desire to hold such assets despite a “strong likelihood” such investment would place them in financial danger.

“While the majority of financial consumers investing in cryptoassets say they could afford to lose the money invested, given the general lack of understanding of cryptoassets or the risks involved, the reasons for investing, the use of credit by some and the lack of professional advice among many when purchasing, there is a strong likelihood of a misalignment between the risk profile of some financial consumers and the level of risk they are exposed to,” the report said.

In short, many consumers might not be aware of just how risky investing in crypto assets can be.

“For those of us who are concerned with the protection and education of financial consumers, these are familiar warning signs,” said Greg Medcraft, head of financial and enterprise affairs at the OECD, according to a video transcript of his comments on the study Wednesday, “especially when coupled with low levels of understanding among many consumers.”

“Consumers need to be alerted to the risks they face,” he added.

The survey found many consumers show interest in establishing or even increasing their crypto investments, even as they admit they don't really understand crypto. Only 17 percent of respondents said they understood cryptocurrencies “very well.”

Another potential issue is the respondents’ investing motivations versus financial reality. According to the study, 41 percent of one-time crypto holders bought in “to make money quickly” and 29 percent did so as a retirement plan.

Of those currently holding crypto assets, the report said that “almost one in three (28 percent) [said they] had invested more than they could afford to lose.”

The survey’s findings place Vietnamese, Filipino and Malaysian investors in the upper tiers of crypto holders worldwide. All three sample groups reported comparatively high current crypto ownership rates: Vietnam with 35 percent market penetration, followed by the Philippines at 32 percent and Malaysia at 23 percent.

Other government-conducted surveys have found far lower figures in selected populations. Britain’s Financial Conduct Authority found 73 percent of UK consumers don’t know what crypto is and only 3 percent have bought it; 5 percent of Canadians held bitcoin in 2018, according to the Bank of Canada; and 18 percent of Dutch households invest, reports the Dutch Authority for the Financial Markets.

OECD’s survey aims to set a comprehensive standard for evaluating consumers’ cryptocurrency holdings and sentiments, according to the report. And the work is ongoing; the OECD’s report said this was the “first study” to use the survey instruments, inplying there will be more to come.