Recent research conducted by the Financial Conduct Authority (FCA) has revealed that approximately 2.6 million consumers in the UK have purchased cryptoassets at some point in time. This essentially marks an increase of 1.1 million since the FCA carried out a survey face to face on the same topic in 2019. Among the 1.9 million UK consumers that still have cryptoassets in their possession, such as Ripple, Ether, or Bitcoins, about half of them hold more than £260. This research conducted by the FCA is a part of its work with the Government and Bank of England in attempting to comprehend market size, profiles of consumers and what their attitudes are towards cryptoassets.
This study was conducted online by YouGov and had a total of 2,681 participants. Some of the main results of the study were:
- A great number of the owners of cryptoassets are generally quite knowledgeable about the product, are aware that there is a lack of regulatory protection that is afforded and also understand the associated price volatility risk.
- Around 300,000 cryptoasset owners have a notion that they have and will be protected, which leads to the potential risk of financial damage.
- Adverts play a very central role in influencing the decisions of cryptoasset consumers, with more than a third of participants from the study stating that they were more likely to buy cryptoassets due to viewing an advert.
From those who chose to purchase cryptoassets, 83 percent of them did so via non-UK based exchanges.
The Interim Executive Director of Strategy and Competition of FCA, Sheldon Mills, stated, “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 also previously warned that cryptoassets are incredibly risky and volatile. Many of them are not even currently regulated within the UK. This means that the purchase, transfer and sale of cryptoassets currently fall outside of the regulatory standards, which leaves consumers unable to file complaints to the Financial Ombudsman Service or to try and gain protection from the Financial Services Compensation Scheme.
Together with the Government and the Bank of England as part of a UK Cryptoassets Taskforce, the FCA is hoping to understand and help address the harm that comes from cryptoassets while pushing forward innovation in the interests of the consumers. The Government has stated in its March 2020 budget that it intends to consult on measures to bring particular cryptoassets within the lens of regulations surrounding financial promotions. A policy statement is also expected this year following a consultation on prohibiting the sale of certain cryptoasset derivatives to retail investors.