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Crypto adoption: Inflation was ‘a significant driver of demand’ in 2021, Gemini COO says

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Gemini COO Noah Perlman joins Yahoo Finance Live to discuss inflation as 44% of crypto owners bought a digital asset for the first time in 2021, adoption trends, and the outlook for women in crypto.

Video Transcript

BRIAN CHEUNG: Crypto exchange Gemini releasing a report today noting that 44% of crypto owners in the United States bought a digital asset for the first time in 2021. Joining us now for a deeper dive into the digital asset class and all of the brand new HODLers is Gemini COO Noah Perlman, alongside Yahoo Finance's David Hollerith. Noah, it's great to have you on the program this morning. Give us a little bit more color in terms of what you were learning through this report about the profile of crypto owners, which is very different at the beginning of 2022 than it was just a year ago. NOAH PERLMAN: Sure, sure. And thanks so much for having me on to discuss our global report. There really was so much buzz and commentary about crypto over the past year. And we were really excited to dig into the actual data to uncover trends in both adoption, barriers to entry, and just general attitudes towards crypto. And after surveying nearly 30,000 respondents in 20 countries, we found four key findings. First, continued adoption. Second, a broadening of the base of people interested in crypto, and also we can dig into that. We also saw inflation as a significant driver of demand. And finally, a need, a general need and want for more education and regulatory clarity. DAVID HOLLERITH: Yeah, Noah, hi. It's David Hollerith here. Yeah, the inflation point was pretty interesting to me. I saw that in countries where the native currency or local currency experienced over, I think it was 50% more-- or more a rise in inflation, there was about five times more likelihood that they planned to purchase cryptocurrency. Now we've sort of seen cryptocurrencies track like risk-on assets, like similar to equities. So I was sort of curious sort of about what you've been thinking about in terms of the inflation hedge versus risk asset sort of assessment of what cryptocurrencies are. NOAH PERLMAN: Yeah, no, great question. And it's interesting because the response we saw differed from, as you pointed out, from country to country. And this wasn't so surprising to us, but it was a validation of a theory that many in the space have had, which is simply that inflation drives interest and could compel more people to invest in crypto. And what we saw globally was a significant correlation between a country's history of currency devaluation and their interest in crypto, which actually could have interesting implications here in the United States as we continue to face inflationary pressures. And when we dug in, what our conclusions were, if a country has a stable currency, crypto can be seen almost as a nice to have, versus where you've got an unstable currency, it's almost a need to have, if that makes sense. And as you indicated, our stats showed where the national currency had been devalued 50% or more in the last 10 years, respondents were nearly five times more likely to say they intend to purchase crypto in the coming year. AKIKO FUJITA: Hey, Noah, it's Akiko here. You know, that naturally begs the question about how big of a driver, what's been playing out between Russia and Ukraine has been. Talk about a currency that's been devalued. I mean, the ruble is just it. That's been a big market for crypto already. What have you seen on that front? NOAH PERLMAN: Look, exactly both inflationary pressures-- I mean, we're not allowed in Russia, so we wouldn't see actually on our exchange. But what the war in Ukraine has done, both in addition to sort of whatever sort of inflationary pressures on the ruble, what we think it will do is accelerate countries' own-- various countries' examination of digital currency adoption and an overall assessment of their own currency dependencies. Those close to the space have long talked about the ability of digital currency to ease friction in connection with cross-border payments. And unfortunately, we've got a sort of a real-time experiment unfolding before us right now. DAVID HOLLERITH: And Noah, I also saw that sort of the breakout of women owners or women who plan to own cryptocurrency, it was sort of higher in developing countries, as opposed to developed countries. I was just sort of curious if you saw why there-- or had any idea why there was a breakout like that. NOAH PERLMAN: Yeah, no, right, and this was part of a trend we saw last year of broadening the base. So we saw general continued growth in interest in the space. But this trend of a broader audience was something that was somewhat surprising to us. For example, in previous state of crypto reports that we've done, we saw that the average crypto investor was white and male. And in this year, we saw women dramatically growing their interest in the space. So our stats showed 32% of crypto owners are women, but among the crypto curious, who we define as those who are planning to purchase crypto for the first time in the next year, 47% were women, were women globally. And notably, women sort of leading the way in certain developing nations, with women representing at least half the crypto owners in Indonesia, in Nigeria, and in Israel. And that was somewhat surprising to us. BRIAN CHEUNG: And then, Noah, lastly here, you asked some of the people responding to this report as well about whether or not they saw certain types of things as concerns to cryptocurrency. What did you see as the biggest risk? NOAH PERLMAN: The biggest risk remains regulatory clarity, as well as a general-- a continued concern around sort of security. There's still despite how long we are in this phase, there are still those who view crypto as the Wild, Wild West. And it's one of the reasons why Gemini and other peers continue to invest in security, in educational resources, and engaging with the regulators around the world so that we can give consumers not just security, but also some clarity and comfort that the space is safe, and it is here to stay. AKIKO FUJITA: Well, Noah, it's great to have you on today. Really hope to have you back on the show again soon. Noah Perlman, Gemini COO, and our very own David Hollerith.