New research from the Financial Conduct Authority (FCA) claims 2.3 million UK adults now hold crypto assets compared to 1.9 million a year ago – a 21% climb.
However, as the FCA also points out, it does not “hold significant relevant data about them”. That’s because most crypto products are unregulated.
So if the market turns sour they are unlikely to have access to the Financial Services Compensation Scheme, the FCA dutifully points out, "or the Financial Ombudsman Service. If consumers invest in these types of products, they should be prepared to lose all their money”.
Cryptoassets now less risky?
The FCA’s research claims that holding cryptoassets is now judged rather less of a gamble compared to last year by the UK public.
“38% of crypto users,” the FCA said this morning, “regard them as a gamble (down from 47% last year), while increasing numbers see them as either a complement or alternative to mainstream investments.”
That’s almost a 20% fall. But the FCA then goes onto say that the level of overall crypto understanding is worsening, “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”.
No protection net – still
So it’s mixed news – more people consider nascent cryptos as a serious support to mainstream investments, yet with zero protection bolted to them if things turn bad.
Crypto volatility is extreme: just a month ago, Bitcoin plunged close to 30% as a major sell-off unwound. But then again, a year ago bitcoin was valued at $9,380. It's current $39,288 valuation means a 318% rise in value, despite some vertiginous volatility en route.
The FCA’s executive director, Consumers and Competition, Sheldon Mills says their research highlights “increased interest in cryptoassets among UK customers. The market has continued to grow, and some investors have benefitted as prices have risen”.