Bloodied crypto coin
Illustration: Christopher T. Fong/Protocol

The real faces of the crypto crash

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Friday: the real faces of the crypto crash, Upstart’s bad quarter and CZ’s Voyager shade.

Off the chain

Trend collision dynamics should have predicted this: There is a “buy now, pay later” service for NFTs. Teller is really more like old-school layaway since the NFT is stuck in an escrow wallet until it’s paid off. It’s on the blockchain, though!

— Owen Thomas (email | twitter)

The real faces of the crypto crash

The crypto crash is rattling a once hard-charging industry and its investors. But the meltdown could also cause harm to consumers who lost their savings when the crypto market went into a tailspin. The common view of crypto is a realm dominated by young white bros. But the people who could get hurt are actually far more diverse.

Crypto crashed right as it was going mainstream. Crypto holders come from all walks of life and they own it because they see it as an investment, according to a July 2022 report from Morning Consult.

  • Crypto ownership surged in the second half of 2021 when consumers “bought the dip.” And 17% of U.S. respondents said they or “someone in their household” own crypto, the report said. A majority, about 72%, are men, while 28% are women.
  • Crypto owners are “a more ethnically diverse group,” the report said. About a quarter of crypto owners, or 23%, are Hispanic, versus 17% of the general population. Overall, 41% of cryptocurrency owners identify as nonwhite.
  • It’s also a young population that generally isn’t making a lot of money. The majority of crypto owners, about 60%, are millennials or younger, and about 42% make less than $50,000 a year. Only 25% make $100,000 a year or more.

In the U.S., crypto appeals to the banked and the superbanked. Despite crypto’s promise to bank the unbanked, most crypto holders actually use a bank or two or more, according to the report.

  • Only about 12% of crypto owners are unbanked. Most are heavy users of traditional banks and other financial services — consumers we could call superbanked. “Far from shunning traditional finance, crypto owners seem to embrace it,” the report said.
  • Most crypto owners, about 66%, use the asset “as a way to make money rather than send it,” the report said. Only 16% say they use it to send funds or buy things, while 18% say they view crypto both as an investment and a means of transacting.
  • Globally, crypto tends to be more widely accepted in lower-income countries, especially those with “some form of foreign exchange or capital controls,” investment banker Joshua Jahani wrote recently, adding that crypto is “a lifeline for the world’s most vulnerable.” But Remitly CEO Matt Oppenheimer told Protocol’s Lindsey Choo that many of the remittance company’s customers aren’t really using crypto, and may never be crypto users, because of the trust element in sending money internationally.

Crypto owners “remain relatively confident,” the report said. Despite “market volatility” and “economic turmoil,” crypto owners appear to be holding their tokens and even planning to buy more. This could change “if inflation gives way to a recession and a ‘crypto winter.’” That may be another indicator of how mainstream crypto consumers diverge from the elite: Some industry leaders have said crypto winter is already here.

— the Fintech team (email)


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On the money

On Protocol: Aave announced Thursday that it’s launching a stablecoin, GHO, despite the general mistrust around stablecoins following the crash of UST. While the stablecoin is collateral-backed and pegged to the U.S. dollar, the collateral is made up of other crypto assets.

Upstart revealed its second-quarter results early, and it’s ugly.Unaudited results showed revenue of $228 million, 25% below the upper range of its $305 million guidance. The loan marketplace said it was “funding constrained” and cited the impact of rising interest rates.

Also on Protocol: KeyFi is suing Celsius in another hit for the troubled crypto lender, alleging that it was not paid for its work and that Celsius mismanaged customer funds. Also, that Celsius is a “Ponzi scheme.” You know, that.

Reddit is launching a Collectibles Avatar marketplace. Hosted on the Polygon blockchain, the market will let Reddit users purchase NFTs to use as profile pictures. Buyers must pay in U.S. dollars — hey, no gas fees! — and the NFTs cannot be sold on a secondary market.

The U.S. Treasury Department announced a proposed framework for digital asset regulation. The first document to come out of Biden’s executive order, the framework largely addresses global cooperation in digital asset regulation, as well as mitigating financial risks and illicit finance.

Ken Griffin spent $54 million to fight a tax increase, and it worked. The Citadel CEO launched a campaign for voters to vote against a tax increase for him and other rich residents of Illinois. IRS data shows that the campaign cost him less than a tax raise would have. He also gave away $130 million to Chicago institutions in June as he moved his firm to Miami.


Maybe the problem with PayPal is that it’s prioritizing diligence over delight? “PayPal is an American financial services company that exists to update its agreements,” anonymous account @pourmecoffee tweeted.

Genesis CEO Michael Moro took to Twitter to address the crypto lender’s exposure to Three Arrows Capital, confirming that the “large counterparty who failed to meet a margin call” last month was indeed 3AC, adding that parent company Digital Currency Group will assume some liability.

Binance CEO Changpeng Zhao claims he doesn’t like to criticize his peers, which sounds like something we’ve heard from contestants on “RuPaul’s Drag Race” right before they start reading each other to filth. Anyway, here’s CZ on Sam Bankman-Fried’s Alameda deal with Voyager Digital, which almost immediately went south after Voyager filed for bankruptcy. “I try not to comment on our competitors or industry peers. But I would never do that type of deal … I would just not invest in that company, I'll keep my money,” he said in a podcast.

The chart

Here’s a deeper dive on those Morning Consult crypto-consumer numbers. They show that there’s some truth to the “crypto bro” stereotype: Most crypto owners are young, white and male, a Morning Consult survey found. But they are also more diverse and less wealthy than stereotypes might suggest.


You're either real-time or out of time: Many of the challenges facing our world today are increasingly complex and critical, such as climate change, talent shortages and supply chain disruptions. Solving these problems requires analyzing large data sets, quickly. Additionally, organizations must use data to predict future issues and then determine the most effective solution.

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Thanks for reading — see you Monday!

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