FCA research note: 2.3 million adults now hold cryptocurrency in the United Kingdom but the understanding about it has fallen

Cryptocurrencies have traditionally been outside of regulation. Through the research note “Cryptoasset consumer research 2021” by the Financial Conduct Authority (FCA), it can be seen that there are already about 2.3 million people owning cryptocurrency, up from about 1.9 million in 2020. For this year’s research, the population of the UK is considered to be around 52 million, while in 2020 the number is around 50 million.

FCA research: Cryptocurrency holders in the UK rose by 21% to 2.3 million

The 2021 research follows heightened public interest and media coverage, alongside the continued growth of the cryptocurrency market, including high cryptocurrency prices. It also comes after more widespread involvement of financial services firms in the market and significant institutional investment. With these trends in mind, it is unsurprising that our research shows that both ownership and awareness have risen.

Since 2020, interest in crypto assets has reached beyond retail consumers, as institutional investors and traditional financial services firms have shown an increased appetite for engaging in the market.

FCA now estimates that 2.3 million adults now hold crypto assets (up from 1.9 million last year) in the United Kingdom, with 78% of adults have heard of crypto assets.

The research stated:

“The profile of cryptocurrencies has risen – 78% of adults said they have heard of cryptocurrency, up from 73% in a year, but an overall understanding of cryptocurrency has declined.”


Source: Research note “Cryptoasset consumer research 2021”

While awareness has risen, understanding has fallen. This has risen across our surveys – from 42% in 2019 to 73% in 2020, and now up a further 5% points in 2021.

The consumer research shows 38% of crypto users regard them as a gamble (down from 47% last year) while increasing numbers see them as either a complement or alternative to mainstream investments.

The research stated:

“However, we find that attitudes have shifted, as cryptocurrencies appear to have become more normalized – fewer crypto users regard them as a gamble (38%, down from 47%) and more see them as an alternative or complement to mainstream investments, with half of the crypto users saying they intend to invest more.”

Enthusiasm for cryptocurrencies as a product is growing among crypto users. There was an increase in agreement that “I have had positive experiences with cryptocurrencies and I am more likely to buy more”, rising from 41% to 53% among crypto users. A corresponding fall in answer to “I regret ever having bought cryptocurrencies” with net agreement down from 15% to 11%. However, 22% of crypto users reported having a bad experience relating to owning or acquiring cryptocurrency.

Most consumers recognize that crypto investments are not protected, although 12% of crypto users believe otherwise.

New to the report this time around is stablecoins.

The research stated:

“One in three (33%) crypto users had heard of the stablecoin market leader, Tether. Binance Coin achieved 27% recognition, followed by Diem (21%), USDC (18%), TrueUSD (11%) and Paxos Standard (9%). Ownership of these was much lower, peaking at 7% of crypto users for Binance Coin followed by 6% for Tether. 87% of crypto users said none of the cryptocurrencies they purchased were stablecoins.”


Source: Research note “Cryptoasset consumer research 2021”

While awareness of stablecoins may be edging up, understanding remains low. Only 36% of crypto users were able to correctly identify the definition of stablecoins. Indeed, when asked why they hadn’t bought any stablecoin, 45% of crypto users referred to a lack of knowledge about them, and 15% a lack of knowledge on how to buy them. But 46% mentioned either being unclear on the benefit of having no need to buy them, demonstrating that many consumers are less persuaded of the benefits of stablecoins.

Sheldon Mills, FCA’s Executive Director, Consumers and Competition said:

“The research highlights increased interest in crypto assets among UK customers. The market has continued to grow, and some investors have benefitted as prices have risen. However, it is important for customers to understand that because these products are largely unregulated that if something goes wrong they are unlikely to have access to the FSCS or the Financial Ombudsman Service. If consumers invest in these types of products, they should be prepared to lose all their money.”

Future purchases

Finally, about half of crypto users plan to buy more; a similar proportion says they know they’ll make money at some point. Regarding future plans, 47% of crypto users said they are planning to buy crypto in the future. 30% said they will use previous gains from crypto to fund this – only 17% said they have already done so. 26% said they will use other long-term savings or investments. This may hint at optimism regarding the future path for cryptocurrency investment returns.

The research concluded:

“Looking forward, 37% of crypto users say they don’t know how long they expect to hold their cryptocurrencies. 16% of those providing a time period said they intend to sell within 3 months. But at the opposite end of the spectrum, 49% said they intend to hold for 5 years or more.”

Many cryptocurrencies are highly speculative, but the FCA does not have consumer protection over the crypto activities of companies, even if a company is registered with the FCA.

The FCA has recently extended the Temporary Registrations Regime (TRR) for existing crypto-asset businesses from 9 July 2021 to 31 March 2022. This allows existing crypto-asset firms, which applied for registration before 16 December 2020, and whose applications are still being assessed, to continue trading.

The extended date allows crypto-asset firms to continue to carry on business whilst the FCA continues with the robust assessment being undertaken.

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