Cryptocurrency ownership has become more popular as attitudes have changed, consumer research from the Financial Conduct Authority (FCA) has found.
The FCA estimates that 2.3 million adults now hold cryptoassets, up from 1.9 million last year, and the research showed that 78 per cent of adults have now heard of cryptoassets, a rise from 73 per cent in 2020.
Enthusiasm for cryptoassets is also growing with over half of crypto users saying they have had a positive experience so far and are likely to buy more – rising from 41 per cent last year to 53 per cent this year.
Fewer people also regret having bought cryptocurrencies, down from 15 per cent to 11 per cent. Just 38 per cent of crypto users regard them as a gamble, down from 47 per cent last year.
However, the level of overall understanding of cryptocurrencies is declining, suggesting that some people who have heard of crypto may not fully understand them, with only 71 per cent correctly identifying the definition of cryptocurrency from a list of statements.
One in 10 who had heard of cryptocurrency said they are aware of the consumer warnings on the FCA website.
Of these, 43 per cent said they were discouraged from buying crypto. Most consumers recognise that crypto investments are not protected, although 12 per cent of crypto users believe otherwise.
“The research highlights increased interest in cryptoassets among UK customers,” said Sheldon Mills, executive director, consumers and competition at the FCA.
“The market has continued to grow, and some investors have benefitted as prices have risen.
“However, it is important for customers to understand that because these products are largely unregulated that if something goes wrong, they are unlikely to have access to the FSCS or the Financial Ombudsman Service.
“If consumers invest in these types of products, they should be prepared to lose all their money.”
The FCA has issued several further consumer warnings on cryptoassets, stating that investing in them is high risk and that investors should be prepared to lose all their money.
The regulator has said it will continue working closely with the Treasury and other regulators, including through the UK Cryptoasset Taskforce.
“The FCA’s cryptocurrency research note, released today, brings into sharp focus the real cause of crypto-induced anxiety for the regulator,” said Claire Simm, managing director, financial services compliance and regulation at Kroll.
“The FCA’s concern is not with those who currently own crypto and are generally aware of the risks, but rather with those who don’t.
“In addition to protecting consumers from potential harm when investing in cryptocurrency, the FCA faces the challenge of how to regulate such a commodity.
“We may also see the FCA introduce legislation for crypto firms, in a similar guise to the financial promotion rules which legislated that financial promotions must be fair, clear and not misleading. However, only time will tell if this materialises.”