The cryptocurrency market is missing out on 13 million new customers because of a low level of trust among consumers, new research has found.
The study, conducted by TMT Analysis, found that 41 per cent of investors believe there is more fraud in the crypto industry than anywhere else in financial services. And while a quarter of UK adults are willing to invest in cryptoassets, they do not because of security concerns.
Nearly half of those surveyed by TMT Analysis said that crypto will never become mainstream unless security and regulation are improved.
The research comes on the heels of yet another warning by the Financial Conduct Authority concerning the dangers of investing in cryptoassets, which it does not regulate.
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According to figures provided to TMT Analysis, the FCA rejected 88 per cent of cryptoasset applications since the introduction of the requirement to register under money laundering regulations 12 months ago.
Last year $14bn (£11.5bn) was lost due to crypto-crime, up 79 per cent from $7.8bn in 2020, according to Chainalysis.
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The distrust in the crypto market is not only the reserve of the older generation. Under half, or 42 per cent, of people aged 18 to 34 are concerned over the security measures of exchanges. While this is lower than the two thirds of adults aged over 55 who are concerned, it is still a significant percentage.
Meanwhile, more than half of adults admit they still don’t know anything about cryptocurrencies.
“Exchanges and providers need to ensure that they implement more stringent security and anti-fraud processes in order to attract investors and allow crypto to fulfil its potential as a truly viable, global alternative to the current monetary system. Changing consumer perceptions over crypto security is the single biggest barrier to mass adoption,” said Fergal Parkinson, director of TMT Analysis.
“Unfortunately, many potential investors still view crypto as having a ‘wild west’ reputation. Concerns over security appear to be the major factor preventing potential investors from fully embracing crypto – additional layers of security are vital to give people the confidence to make an investment and continue to grow the market. Measures such as number verification are a simple yet vital step in fighting fraud and boosting consumer confidence in the market.”
The study was conducted between 1 and 4 March, featuring views from 2,001 UK adults.