Fresh research by the Financial Conduct Authority has revealed a 1.1 million spike in the number of UK consumers investing in cryptocurrencies, such as Bitcoin and Ripple.
An estimated 2.6m consumers have bought the currencies at some point, up from 1.5 million in last year’s estimate, according to an FCA survey of 2,100 consumers.
The uptick in retail investment comes despite a recent period of sharp volatility in the price of Bitcoin, the largest cryptocurrency by market capitalisation.
The report came out on the last day, June 30, that “cryptoasset” businesses in the UK had to register with the regulator, after it began supervising the sector on 10 January 2020. Any firms that are not registered by 10 January 2021 will be forced to close down.
“Cryptoassets present risks and opportunities for consumers and we hope these insights will help inform the policy debate in the UK and internationally as the use of these assets continue to grow,” said Sheldon Mills, the FCA’s interim executive director of strategy and competition.
Cryptocurrencies are strings of digits representing value that can be traded and used for payment over the internet. They generally run on blockchain, a transaction-logging system that does require oversight from a central authority.
The FCA’s latest research is part of an attempt by the regulator, government and the Bank of England to get a better grasp of the local crypto market. It found the majority of crypto investors are knowledgeable about the product, but also showed that an estimated 300,000 believe they have protection, putting them at risk of financial harm.
The research also found that 83% of crypto purchases take place on exchanges based outside of the UK.
Based on its study, the regulator estimates that 3.86% of the population currently owns cryptocurrencies, or roughly 1.9m adults. Of those, 75% own less than £1,000 in crypto.
The most popular reason cited for purchasing crypto was “as a gamble that could make or lose money”.
The regulator also flagged the importance of adverts, as 45% of all current and previous crypto owners said they had seen a crypto-related advert. Of those people, 35% (roughly 400,000 adults) said such an advert would make them more likely to purchase crypto.
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