An estimated 2.6 million UK consumers have bought cryptoassets at some point, new FCA research reveals. As UK banks continue to offer abysmal interest rates and the stock market offers relatively high risks until a viable – and cheap – Corona vaccine is developed, the wealthy are looking for ways to make a profit from their capital. But how can insurers square the circle regarding crypto’s truly global reach, and therefore lack of regulatory structure, with the actual risks of data breach, outage and fraud? Hmmm, tricky. Here’s the word from the FCA;
The number marks a 1.1 million increase since the FCA completed a face-to-face survey on the same topic last year. Of the 1.9 million that still hold their cryptoassets – such as Bitcoin, Ripple or Ether – half have more than £260.
The research forms part of the FCA’s work alongside the Government and Bank of England to understand market size, consumer profiles and attitudes towards cryptoassets. Amongst the other key findings of the study, which was conducted online by YouGov and saw a total of 2,681 participants questioned, were that:
- 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;
- Adverts 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.
The FCA’s Interim Executive Director of Strategy and Competition, Sheldon Mills, said:
‘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 has previously warned that cryptoassets are highly volatile and risky. Many are not currently regulated in the UK. This means that the transfer, purchase and sale of such tokens currently fall outside our regulatory remit, leaving customers unable to make complaints to the Financial Ombudsman Service or seek protection from the Financial Services Compensation Scheme.
The FCA is working with the Government and Bank of England, as part of a UK Cryptoassets Taskforce, to understand and address the harms from cryptoassets whilst encouraging innovation in the interests of consumers.
In its March 2020 budget, the Government said it intends to consult on measures to bring certain cryptoassets into 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.