FCA: Crypto holders in UK rose by 21% to 2.3 million
Only ten percent of those who have heard of cryptocurrencies are aware of consumer warnings on the FCA website. This shows the regulator’s lack of reach.
The Financial Conduct Authority (FCA) now estimates that 2.3 million adults now hold cryptoassets (up from 1.9 million last year) in the United Kingdom – which is a 21% rise YoY -, with 78% of adults having heard of cryptoassets.
The survey suggests that the majority of the growing number of cryptocurrency holders had a positive experience so far and is likely to buy more in the future as they regard them less as a gamble. The FCA, however, seems to have discouraged half of the consumers aware of warnings on the regulators’ website.
The consumer research shows 38% of crypto users regard them as a gamble (down from 47% last year) while increasing numbers see them as either a complement or alternative to mainstream investments.
Over half of crypto users have had a positive experience so far and are likely to buy more (rising from 41% to 53%), according to the research. Regretful consumers have declined from 15% to 11%.
Only ten percent of those who have heard of cryptocurrencies are aware of consumer warnings on the FCA website, and 43% of these said they were discouraged from buying crypto.
Most consumers recognise that crypto investments are not protected, although 12% of crypto users believe otherwise.
Sheldon Mills, FCA’s Executive Director, Consumers and Competition said: “The research highlights increased interest in cryptoassets among UK customers. 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.”
Many cryptoassets are highly speculative, but the FCA does not have consumer protection powers for the cryptoasset activities of firms, even if a firm is registered with the FCA.
It is unlikely that consumers will have access to The Financial Ombudsman or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.
The FCA has recently extended the Temporary Registrations Regime (TRR) for existing cryptoasset businesses from 9 July 2021 to 31 March 2022.
This allows existing cryptoasset firms, which applied for registration before 16 December 2020, and whose applications are still being assessed, to continue trading.
The extension addresses the fact that a significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations resulting in an unprecedented number of businesses withdrawing their applications.
The extended date allows cryptoasset firms to continue to carry on business whilst the FCA continues with the robust assessment being undertaken.