Crypto ownership in the UK has seen a significant increase, with 12% of adults now owning digital assets, up from 10% previously, as per the latest research by the Financial Conduct Authority (FCA) released on Nov. 26. The study also revealed that awareness of cryptocurrencies has reached 93% among the adult population.
The average value of crypto holdings per individual has also seen a rise, from £1,595 to £1,842. Interestingly, family and friends have emerged as the primary source of information for those who have never purchased digital assets. Additionally, only one in ten buyers admitted to not conducting any research before investing in cryptocurrencies.
Despite the growing interest in crypto, the FCA’s research highlighted that digital assets are largely unregulated in the UK and are considered high-risk investments. Investors are cautioned that they could potentially lose all their money without any regulatory safeguards in place.
The FCA has started outlining its approach to regulating digital assets and has published a roadmap outlining key dates for the development and introduction of the UK’s crypto regulatory regime. This roadmap includes consultations aimed at fostering transparency and engagement in policy development.
Arun Srivastava, a fintech and regulation partner at Paul Hastings, expressed concerns about the UK potentially becoming an outlier in terms of crypto regulation compared to the EU and the US. He emphasized the need for the UK to adapt to the changing regulatory landscape in the crypto space.
The FCA’s analysis also indicated shifts in consumer behavior regarding crypto investments. More individuals are now considering crypto as part of a diversified investment portfolio, with influences from friends and family playing a significant role in their decision-making process. The use of long-term savings to invest in crypto has also increased, along with purchases made using credit cards or overdrafts.
Recent events, such as the crypto market crash in 2022, the cost-of-living crisis, and criminal charges against CEOs of major exchanges, have impacted consumer demand for digital assets. The FCA acknowledges that regulation can influence consumer behavior and is exploring ways to mitigate risks associated with digital assets through its policy work.
The FCA’s roadmap for regulating digital assets spans from 2023 to 2026 and includes key milestones like implementing financial promotion rules, regulating stablecoin issuance and custody, establishing prudential standards, and developing comprehensive rules for trading platforms, intermediation, lending, and staking.
Matthew Long, director of payments and digital assets at the FCA, emphasized the importance of clear regulation to support a safe, competitive, and sustainable crypto sector in the UK. The FCA aims to develop a sector that encourages innovation while ensuring market integrity and consumer trust.
Following legislative changes, the FCA has taken on the responsibility of regulating digital asset promotions since October 2023. In the first year of this regime, the FCA has issued alerts, taken down scam websites, and removed apps to combat illegal promotions targeting UK consumers.
Overall, the FCA’s research highlights the evolving landscape of crypto ownership in the UK and the need for clear and effective regulation to protect investors and promote a healthy crypto market.