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FCA measures spike in consumer uptake of cryptocurrencies

FCA measures spike in consumer uptake of cryptocurrencies

An estimated 2.6 million UK consumers have bought cryptoassets at some point, new FCA research reveals, almost double the number reported last year.

The research, conducted among 2681 consumers by YouGov, found a 1.1 million spike in uptake 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.

The study found 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.

However, an estimated 300,000 cryptoasset owners believe they have protection, which leaves them at potential risk of financial harm.

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, says: "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."

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.

Comments: (2)

A Finextra member
A Finextra member 30 June, 2020, 12:511 like 1 like

Having read how quickly bitcoin and other cryptoassets can rise (and fall), I think most purchases are opportunistic without any real understanding behind what they're doing. Just hoping for a quick profit on the basis that you've got to be in it to win it! While half have more than £260, it probably started out at £500! I s'pose one advantage of owning a cryptoasset would be to enable you to promptly pay any ransom following a ransomware attack! 

Russell Bell
Russell Bell - Fastbase Ltd - Wellington 01 July, 2020, 06:341 like 1 like

Many consumers of investment products understand only part of the risk.  They know the underlying asset may lose value but don't think about the risk of the "platform" failing.  Platform meaning the company that packages the assets for public consumption; the company that spends heavily promoting it's brand and building a slick website.  Customers don't appreciate that they don't actually own the asset, what they own is a debt; the platform company owes them money.  Should that platform company go bust, in theory the "custodial" or "nominee" structure will ring-fence customer funds from the company's operating funds.  In real-life failures the fence often proves insubstantial and funds are lost.  A common story for many asset classes both crypto and traditional.