Who Sells Cryptocurrency?
49 Pages Posted: 7 Nov 2022
Date Written: October 27, 2022
Cryptocurrency has become a major force in the financial system in the last decade. However, even as regulators and policymakers across the globe deliberate on how to account for, regulate, tax, and oversee digital assets and cryptocurrency marketplaces, there is little population-level empirical evidence on cryptocurrency users. Providing broad-based evidence on cryptocurrency sellers and activities is critical to policy deliberations because the nature of regulation is often predicated on who is involved in particular activities. Using administrative data, we provide information on the general characteristics of cryptocurrency users who report their sales to the government, focusing on those individuals who own cryptocurrency directly on the blockchain or through cryptocurrency exchanges. Among the insightful patterns we document are ages, incomes, professions, geographic residences, student and marital statuses, and reported income from gambling of cryptocurrency sellers. The average income of cryptocurrency sellers has declined over time, suggesting the base of sellers has expanded in recent years; the average cryptocurrency seller is just under 33 years old—much younger than the average non-crypto investor at 56—-and this gap has grown over time. Moreover, from 2013 to 2020, the population of individuals selling cryptocurrency evolved from small clusters of people largely working in related industries and residing in coastal states (e.g., California and New York) to an expansive population employed in a broad range of industries and spread out across the country. By documenting compelling patterns of increasingly broad-based use of cryptocurrencies, this study contributes timely evidence to the significant regulatory deliberations and towards an innate understanding of these relatively new financial products.
Keywords: Cryptocurrency, Bitcoin, IRS, Accounting, Finance, Individual Taxation
JEL Classification: M49, G11, H20
Suggested Citation: Suggested Citation