A new report by the Financial Conduct Authority (FCA) has found that awareness and ownership of cryptoassets are on the rise in the UK.
The report, which surveyed over 2,000 adults, found that 91% of respondents had heard of cryptoassets, up from 78% in 2021. The report also found that 2.3 million adults in the UK own cryptoassets, up from 1.9 million in 2021.
While the FCA's report highlights the growing popularity of cryptoassets in the UK, it also pleads caution, warning that cryptoassets are high-risk investments and that there is no guarantee of protection if something goes wrong.
The FCA has started taking steps to tackle this, as they recently announced that from October, crypto firms will have to provide new customers a cooling-off period. During this time, transactions won’t be completed within the first 24 hours, given these new customers a chance to reconsider their purchase.
Going into more detail about what factors contribute to cryptoassets being labelled as high-risk, the report highlighted:
- Volatility: The price of cryptoassets can fluctuate wildly, making them a risky investment.
- Fraud: There have been a number of high-profile cases of fraud involving cryptoassets.
- Security: Cryptoassets are stored in digital wallets, which can be hacked.
The report also examined how people purchase their cryptoassets, and found that most people purchase them using disposable income, although some use credit or borrowed money.
And when looking into why people bought cryptoassets, the FCA's research found that the most common reasons were to make a profit (63%), store value (29%), and use them to make payments (18%).
With crypto continuing to grow in popularity, the FCA is considering how best to regulate the cryptoasset market in the hopes that this will help minimise the risks that were flagged in their report.
While many people are against the regulation of crypto, it’s undeniable that those risks are very real, especially if you’re new to the space. So if you are thinking about buying cryptoassets, it’s important to be aware of what these risks are, and you should always do your research and only invest money that you can afford to lose.
Here are some additional tips for safely buying cryptoassets:
- Only use a reputable exchange.
- Do not store your cryptoassets on an exchange.
- Use a strong password and two-factor authentication.
The FCA's report is a valuable resource for anyone who is considering buying cryptoassets. It provides important information about the risks involved and tips for staying safe. If you are considering buying cryptoassets, we recommend reading the report before you make a decision.
And if you still have questions, get in touch and we’ll be happy to help.
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