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August 12, 2022
Finance Technologies

UK crypto consumers completely clueless

The UK’s Financial Conduct Authority (FCA) has found that consumer attitudes to cryptoassets show they don’t research their purchases and have a “get rich quick” mentality.

"Cryptoassets are complex, volatile products"

“Cryptoassets are complex, volatile products”

At no point does the FCA use the word “MORONS!”, but it has published two pieces of research. This includes qualitative interviews with UK consumers and a national survey. Back in January it called for clarity in this sector.

Christopher Woolard, the FCA’s executive director of strategy and competition, says it wants to “protect consumers and market integrity”.

He adds: “Cryptoassets are complex, volatile products – consumers investing in them should be prepared to lose all of their money.”

The qualitative research indicated some potential harm, including that many consumers may not fully understand what they are purchasing.

For example, several of those interviewed talked of wanting to buy a “whole” coin, suggesting they did not realise they could buy part of a cryptoasset.

Despite this lack of understanding, the cryptoasset owners interviewed were often looking for ways to “get rich quick”, citing friends, acquaintances and social media influencers as key motivations for buying cryptoassets.

Both the survey and qualitative research found that some cryptoasset owners made their purchases without completing any research beforehand.

However, despite the “general poor understanding” of cryptoassets amongst UK consumers, findings from the survey suggest that currently the overall scale of harm may not be as high as previously thought.

The FCA says 73% of UK consumers surveyed don’t know what a cryptocurrency is or are unable to define it – those most aware of them are likely to be men aged between 20 and 44.

The regulator estimates only 3% of consumers surveyed had ever bought cryptoassets. Of the small sub-sample of consumers who had bought cryptoassets, around half spent under £200 – a large majority of these said they had financed the purchases through their disposable income.

Bitcoin appears to be the favourite cryptoasset for consumers with more than 50% of the cryptoasset owner survey sub-sample reporting to have spent their money on this product, while one in three (34%) chose Ether.

The FCA has previously warned that cryptoassets, including Bitcoin for instance, are highly volatile and risky.

Later this year the FCA will consult on banning the sale of certain cryptoasset derivatives to retail investors. HM Treasury is also exploring legislative change to potentially broaden the FCA’s regulatory remit to bring in further types of cryptoassets.

You can read the FCA’s research reports here.

In other news today (8 March), the FCA confirmed that the Financial Ombudsman Service will soon be able to require financial services firms to pay significantly more compensation to consumers and businesses.

UK crypto consumers completely clueless
UK crypto consumers completely clueless

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