8th June 2023 – (London) The ownership of cryptocurrencies in the U.K. more than doubled last year, according to the Financial Conduct Authority (FCA). The regulator reported that almost 10% of the surveyed population owned some form of crypto in 2022, which is more than twice the number from the previous year. Despite repeated warnings from regulators, this steep increase shows that investors are still intrigued by this new asset class.
However, the crypto industry has faced a difficult week with the U.S. Securities and Exchange Commission suing two of its largest exchanges, Binance and Coinbase, over alleged securities law violations. In recent months, the U.K. has proposed a comprehensive new regulatory regime for the crypto industry whereby rules governing it will be brought into line with those of traditional financial services.
In response to these challenges, the FCA has said that it is crucial to provide people with the right risk warnings and time to make informed choices. The regulator has also announced that its crypto marketing regime will require companies to use risk warnings and offer a “24-hour cooling-off period” for customers. These rules will apply to all crypto asset businesses marketing to UK customers, regardless of their location. Regulatory change is on the horizon, and the FCA urges the industry to prepare for this significant shift.
The FCA’s research has also highlighted that 36% of the 2,000 adults polled have seen or heard crypto adverts, while 25% of those who had not previously been involved in crypto became “curious” due to advertising campaigns. Additionally, the research found that the vast majority of those buying crypto used disposable income, and only 6% borrowed money. The most common reason for buying crypto was stated as “as a gamble” by 40% of respondents.
However, the FCA’s research found that 28% of those who do not use crypto would be “more likely” to buy it if the market and activity were regulated to a similar standard as traditional financial services. A cross-party group of MPs recently criticised the proposed regulatory regime, suggesting that crypto be overseen as a form of gambling.
In conclusion, the U.K.’s crypto market is growing at an impressive rate despite facing regulatory challenges and lawsuits against major exchanges. The FCA’s research shows a promising interest in crypto, but the regulator insists that it is crucial to provide people with the right risk warnings and time to make informed choices. Crypto asset businesses marketing to UK customers must prepare for regulatory change as the FCA’s clampdown on mis-selling draws near.