The UK is experiencing growing interest in cryptoassets, according to the UK Financial Conduct Authority (FCA). The research by the FCA states that 2.6 million UK consumers have purchased digital assets showing a dramatic 1.1 million increase since research completed by the FCA last year. This year’s research quantitative research is from a larger sample of cryptoasset owners, than last year.
This research focused on cryptoassets that are outside of the regulatory perimeter including Bitcoin, Ether, and Ripple. As they are unregulated, the FCA does not hold significant relevant data about them.
The FCA reports that of the 1.9 million that hold cryptoassets half have less than £260 in holdings, with 75% holding less than £1000 in value, while 1% of digital asset holders have more than 80% of the value.
The research by the FCA is part of an ongoing effort to better understand the emerging cryptoasset marketplace. The FCA is working alongside the UK Government and Bank of England to comprehend the market size, consumer profiles, and attitudes towards cryptoassets.
In the past, the FCA has cautioned consumers that digital assets are highly volatile and risky. Many are not currently regulated in the UK and fall outside the FCA’s regulatory remit, leaving customers unable to make complaints to the Financial Ombudsman Service or seek protection from the Financial Services Compensation Scheme.
Additional findings include:
- The majority of cryptoasset owners are generally knowledgeable about the product, are aware of the lack of regulatory protection afforded and understand the risk of price volatility;
- An estimated 300,000 cryptoasset owners believe they have protection, which leaves them at potential risk of financial harm;
- Advertisements play a key role in influencing cryptoasset consumers’ decisions, with more than a third of respondents saying an advert made them more likely to purchase cryptoassets;
- Of those who purchase cryptoassets, 83% do so through non-UK based exchanges.
- 27% had never heard of cryptocurrencies, compared with 58% in the survey last year
The number one reason why investors bought cryptocurrencies was “as a gamble that could make or lose money” (47%).
The research said the 17% of investors bought crypto for political or ideological reasons such as they do not trust the financial system.
Sheldon Mills, the FCA’s Interim Executive Director of Strategy and Competition, commented on the report:
“This FCA report reveals the increasing popularity of cryptoassets among the UK consumer population and underlines the importance of our work to gain a deeper understanding of this market and how people interact with these assets. Cryptoassets present risks and opportunities for consumers and we hope these insights will help inform the policy debate in the UK and internationally as the use of these assets continue to grow.”
The FCA continues to work with the Government and Bank of England, as part of a UK Cryptoassets Taskforce to learn about the emerging market and encourage innovation that is in the interest of consumers.
In the March 2020 budget, the Government said it intends to consult on measures to bring certain cryptoassets into the scope of financial promotions regulation. A policy statement is due this year following a consultation on banning the sale of certain cryptoasset derivatives to retail investors.
FCA research-note-cryptoasset-consumer-research- June 2020