UK Consumers Who Buy Crypto Looking for Way to ‘Get Rich Quick’, Regulator Warns

Home » UK Consumers Who Buy Crypto Looking for Way to ‘Get Rich Quick’, Regulator Warns

Britain’s financial services regulator has published in-depth research about crypto assets – gauging consumer awareness and overall attitudes towards virtual currencies.

The Financial Conduct Authority (FCA) findings reveal that many Britons who have purchased crypto in the past have been looking for ways to “get rich quick” – telling researchers that they often regard these assets as a shortcut to becoming wealthy. The report suggests that social media often plays a pivotal role in influencing people to get involved with digital currencies like Bitcoin in the first place.

Other motivations included “fear of missing out” – or FOMO for short. Those who spoke to the FCA said that they were driven to invest after hearing stories about people who had made significant sums of money as prices rose during 2017.

However, the Revealing Reality survey also concluded that many of those who are getting involved in cryptocurrencies have little understanding about what to expect. While some failed to realise that many coins and tokens are available in parts – meaning that someone can buy a fraction of a Bitcoin in line with their budget – many of those questioned said they only wanted to buy “whole” coins.

Others seemed to lack knowledge about what crypto assets are. A substantial amount of those who took part in the questionnaire believed that they would get tangible assets as a result of their investment – primarily because phrases such as “coins” and “mining” made them wrongly think they would receive something physical.

Perhaps one of the more concerning findings is how many people fail to do their homework before investing in cryptocurrencies. The FCA said that the results of its study tally up with another survey performed by Kantar TNS, which revealed that one in six consumers perform no research at all before making a purchase.

An insight into the future

It could be argued that the most damning part of the FCA’s research concerns the levels of awareness afforded to cryptocurrencies by the British public. The regulator estimates that just 3% of those it surveyed had ever bought an asset – “and most consumers who haven’t bought crypto assets to date aren’t likely to do so”. Its summary predicted that 73% of UK consumers don’t know what a cryptocurrency is – and unsurprisingly, those likeliest to be able to give a definition are men aged 20 to 44 who are middle or upper middle class.

Outlining its evidence, the FCA added:

“Consumers generally don’t spend much on cryptoassets and they tend to use their own money. Our survey indicated that, amongst a small sub-sample, around half of those who buy cryptoassets spend under £200. Most use their own disposable income – none of those we surveyed within the sub-sample, said that they borrowed money.”

To accompany its report, the FCA has released updated guidance on cryptocurrencies for the public. It says that Bitcoin and other assets are not currently regulated in the UK, meaning investors would not have access to consumer protection schemes in the event something goes wrong.

Summarising its current view in no unclear terms, the regulator warned:

“Cryptoassets are considered very high risk, speculative investments. If you invest in cryptoassets, you should be prepared to lose all of your money.”

The stance of regulation has been fluctuating from country to country. Some have decided to outlaw cryptocurrencies altogether, while others have been more circumspect. Earlier this week, Israel’s financial regulator recommended that a regulated platform for such assets is introduced – enabling coins to be traded and initial coin offerings to take place.

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