Black investors and cryptocurrency

Around 25% of Black investors own cryptocurrency and are less likely than white investors to think cryptocurrency is a risky investment, according to the 2022 Ariel-Schwab Black Investor Survey

The survey found that younger Black Americans are more likely to start investing through crypto.

The sudden concern or interest in Black Americans crypto investing may only heighten the historical mistrust of the financial industry within the Black community.

“Over Thanksgiving, we were talking about crypto. My son’s first angle was that we should not trust the Federal Reserve and government,” Kelly Johnson, portfolio manager for Schwab Asset Management, told Yahoo Finance Live (video above). “We should be invested in something that is not going to be looking at us in terms of race, but just in terms of our ability to invest.”

The financial service industry has always garnered mistrust within the Black community from discriminatory and predatory practices in insurance.

From the Schwab Investor Survey, we saw this underlying theme of distrust of [financial institutions] and trusting technology because technology tends to be less racially biased,” Johnson said. “In a way, that underpins some of the investments that we saw in crypto.”

This is why when a legislator used the Black community as a reason to regulate cryptocurrency, it wasn’t well received.

“I’m told crypto currency enjoys significant investment by those in disenfranchised and minority communities, of course that was also true of subprime lending…[there’s] concern that low and moderate-income people of color will be left holding the bag if we see a collapse in crypto currency or stablecoin,” Representative Brad Sherman said in a February 8, 2022 House Committee on Financial Services.

The comparison to subprime lending begs the question where was the concern when predatory lenders went unchecked causing Black homeowners to become foreclosed on during the 2008 housing crisis. 

“Systemic barriers and racial disparities in the lead up to the Great Recession [saw] white families with annual incomes of less than $30,000 were less likely to get subprime mortgages compared with Black families with incomes of more than $200,000,” as noted in The Aspen Institute’s Foundation of a New Wealth Agenda.

Cryptocurrency is about self sovereignty 

Black empowerment has been rooted in the Black community being in control of its financial and economic destiny that was taken away when Black Wall Street and other black enterprise areas nationwide were burned down or taken over.

“Crypto is about self sovereignty, having your Bitcoin hardware wallet gives you autonomy, but if you don’t have your own private keys then ‘not your keys, not your coins’,” Najah Roberts, a former financial planner turned crypto educator for the Black community, told Yahoo Money. “If you have your key, unless someone knows your password, it can’t be seized or frozen by the government. However, all crypto currencies aren’t created equal, which is why I say get Bitcoin because Bitcoin is decentralized.”

The idea of being self-sovereign and crypto being decentralized, such that it can’t be frozen like assets in a bank by the government, has an appeal to Black Americans because the U.S. government approved discriminatory tactics like redlining and used eminent domain to take land from Black Americans — like Seneca Village, Bruce Beach, and Gordon Manor

One thing that does concern Roberts is crypto regulation and what that means for Black crypto investors. 

“The crash is draining the real swamp and regulation is good to weed out the bad actors, but we’ve got to make sure regulation is done properly,” Roberts said. “Why do you need to be an accredited investor for crypto? If you don’t have a million dollars liquid then you won’t be able to invest in crypto? It would hold the everyday average Joe back. It sounds like “opportunity zones” in urban neighborhoods where investors infiltrated our communities and took over.” 

Black investors are more likely to be concerned about ESG investing

Being self-sovereign and autonomous means freedom from government sanctioned bias and being able to address social justice concerns. 

“I invest for purpose, not price — like the Haiti coin,” Roberts said.

We found that there was a wide gap between the level of ESG (environmental, social, and governance) preference among Black investors versus white investors,” Johnson said. “Black investors were more interested in having their voice heard and wanting to do well with their money as well as doing good.”

Video Transcript

 

 

Ronda Lee
Founder, Editor-in-Chief
Ronda is an attorney, writer, and entrepreneur. She is a contributing writer for the Huffington Post. Originally from Chicago, she has lived in Los Angeles and New York. She loves to travel and is passionate about education equity, especially for first generation college students.