UK Regulator Finds Understanding of Crypto Decreased as Ownership Increased

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In Brief
  • The UK’s Financial Conduct Authority (FCA) released the results of its latest quantitative study on cryptocurrencies.

  • The research finds that crypto ownership has risen to around 2.3 million, up from around 1.9 million in 2020.

  • However, as ownership has increased, the relative level of understanding for crypto assets has fallen.

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The UK’s Financial Conduct Authority (FCA) released the results of its latest quantitative study on cryptocurrencies.

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The study is the third such undertaking by the FCA since October 2018. The FCA highlights that this latest study follows augmented public interest and media coverage of cryptocurrencies. It also noted the increased involvement of financial services firms and institutional investment in the market.

The study attributed the rise in crypto ownership and awareness to these factors.

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More ownership, but less understanding

The most substantial finding of the study is that 2.3 million people now own cryptocurrencies in the UK. This is a jump from the estimated 1.9 million in 2020. However, in light of the increased ownership of cryptocurrencies, the relative level of understanding has declined. This suggests that some newcomers to cryptocurrencies don’t truly understand what they are buying into.

The study also added that median holdings of cryptocurrencies have risen from £260 to £300. Although it noted that the profile of cryptocurrency owners did not change substantially. An average cryptocurrency owner are middle to upper-middle class males over the age of 35.

On the other hand, awareness has significantly increased, as 78% of adults have now heard of cryptocurrencies. 

Cryptocurrencies have also become increasingly normalized, with 38% seeing them as a gamble, down from 47%. More people also see them as a legitimate alternative or complement to mainstream investments. Half of all crypto users intend to buy more.

FCA’s crypto business extension

Earlier this month, the FCA extended its deadline for its Temporary Registrations Regimes (TRR) until March 2022. The TRR enables crypto asset firms registered before December 2020 to continue trading while the FCA assesses their applications. The original deadline for the TRR was July 9, 2021.

The FCA said it was extending the deadline because many businesses were not meeting the required anti-money laundering standards. This led to “an unprecedented number of businesses” withdrawing their applications. The FCA added that although this wouldn’t be the only element it would assess, it would only register firms that met these standards.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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