2023 FDIC Report Reveals Crypto Usage More Common Among Underbanked Households in the U.S.

A new report from the Federal Deposit Insurance Corporation (FDIC) reveals that cryptocurrency usage in the United States in 2023 was notably more common among underbanked households than those with full access to traditional banking services. The findings shed light on how financial inclusion and access to banking are intertwined with crypto adoption, with underbanked individuals turning to digital assets as an alternative financial tool.

Key Findings: Underbanked Households Lead in Crypto Adoption

According to the FDIC’s Nov. 12 report, which surveyed 60,000 U.S. households, 6.2% of underbanked households reported using cryptocurrency, compared to just 4.8% of fully banked households. The term “underbanked” refers to households that have a bank account but still rely on nonbank financial services such as payday loans and check cashing services.

In 2023, approximately 14.2% of U.S. households (about 19 million people) were classified as underbanked, a group that is disproportionately turning to cryptocurrencies for financial inclusion. Interestingly, the report showed that crypto usage was more prevalent among certain demographic groups, particularly higher-educated and younger households, as well as Asian and White households, and those in the working-age group.

The FDIC report also uncovered a stark contrast in crypto adoption based on income levels. Among households with annual incomes of $75,000 or more, 7.3% reported using crypto. In comparison, only 1.1% of households earning less than $15,000 used digital assets. This highlights how crypto adoption is often more prevalent in higher-income households, yet the underbanked, often with lower incomes, are using crypto as an alternative financial service to traditional banking.

The survey found that the vast majority of households using crypto (around 95%) hold digital assets primarily as an investment, with only 4.4% of crypto users utilizing it for purchases, reflecting the investment-centric nature of crypto adoption in the U.S.

Unbanked Households and Crypto Usage

The report also examined the crypto usage patterns of unbanked households, which make up 4.2% of U.S. households (approximately 5.6 million people). These households lack any checking or savings account at a bank or credit union. According to the FDIC, only 1.2% of unbanked households reported using crypto, while 5% of fully banked households participated in digital asset ownership.

The study revealed that most unbanked households (about two-thirds) rely entirely on cash, while a smaller portion (around one-third) uses a combination of prepaid cards and online payment services like PayPal, Venmo, and Cash App.

The FDIC report highlighted the ongoing challenges faced by minority, lower-income, disabled, and single-parent households in accessing traditional financial services. FDIC Chairman Martin Gruenberg commented on these disparities:

“This survey reveals that significant disparities in access to the banking system for minority, lower-income, disabled, and single-parent households still exist and need to be addressed.”

The report underscores the need for more comprehensive financial inclusion initiatives, as the underbanked population increasingly seeks alternatives like cryptocurrencies to access financial services that are not fully available through traditional banking systems.

Coinbase’s Recent Warning About Crypto-Related Banking Restrictions

In a related development, earlier this month, Coinbase revealed that the FDIC had advised banks to avoid offering crypto-related banking services, citing concerns about the stability and regulation of digital assets. According to Coinbase, the FDIC shared “over 20 examples” of such warnings, raising concerns about the broader regulatory landscape for crypto firms and banking institutions in the U.S.

The FDIC’s findings offer important insights into the intersection of cryptocurrency and financial inclusion in the U.S. While crypto usage remains higher among underbanked and low-income households, it also highlights how these populations are turning to digital assets as a way to bypass traditional financial systems that they may not have full access to. As the regulatory landscape for crypto continues to evolve, the role of digital assets as an alternative financial tool will likely continue to grow, particularly in underserved communities.