2.3 million people in UK holding cryptoassets

An estimated 2.3 million adults now hold cryptoassets in the UK, new research published by the FCA has revealed.

The figure is an increase from 1.9 million people last year, while the research also showed that 78% of adults have now heard of cryptoassets, which is up from 73% in a year.

The FCA’s findings, based on a nationally representative online sample of 2,568, indicated that as holding cryptoassets has become more common in the UK, attitudes to them have changed. Thirty-eight per cent of crypto users regard them as a gamble, a figure down from 47% last year, while increasing numbers are viewing them as either a complement or alternative to mainstream investments.

By contrast, the FCA found that the level of overall understanding of cryptocurrencies is declining, suggesting that some people who have heard of crypto may not fully understand it, with only 71% correctly identified the definition of cryptocurrency from a list of statements.

However, just one in 10 who had heard of cryptocurrency said they are aware of consumer warnings on the FCA website. Of these, 43% said they were discouraged from buying crypto.

FCA executive director, consumers and competition, Sheldon Mills, 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.”

The research is the FCA’s fourth consumer research publication on cryptoassets ownership, and forms part of the regulator’s strategy to develop its thinking on the potential harms and benefits to consumers from crypto. The FCA stated that it will continue to work closely with the Treasury and other regulators, including through the UK Cryptoasset Taskforce.

Commenting on the research, AJ Bell financial analyst, Laith Khalaf, said the findings “paint a broadly positive picture”, and show that most consumers are using crypto sensibly and moderately.

“The average holding value is just £300 and those who have bought crypto tend to be further up the income scale, which means they have greater capacity to sustain losses,” Khalaf said. “A high proportion of consumers recognise cryptocurrency is a gamble and a growing number are using it as part of a wider investment portfolio, which indicates they understand the risks and how to mitigate them.”

Khalaf also warned of a “dark underbelly” in the figures, and suggested there is still potential for widespread consumer harm from cryptoassets.

“The fact that 14% of crypto buyers have borrowed to invest is simply terrifying,” he added. “The extreme volatility and uncertain long-term outlook for crypto means holdings can be wiped out, leaving borrowers with nothing but their debt as a memento.

“Buying cryptocurrency is a dangerous financial activity and while many consumers appear to understand the risks, some are carelessly playing with fire.”

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