According to a new study released by the Financial Conduct Authority (FCA) on November 26, ownership of cryptocurrencies in the UK has increased from 10% to 12% of adults. Awareness of virtual currencies has also increased, reaching 93% of the adult population.
The FCA research revealed that the average amount of crypto holdings per person increased from £1,595 to £1,842. For those who have never purchased a digital asset, family and friends emerged as the most common source of information, but only one in 10 buyers admitted they did not do research before investing.
Around a third of respondents believe they can complain to the FCA for redress and financial protection if something goes wrong. However, digital assets remain largely unregulated in the UK and are considered high risk. Investors have been warned they could lose all their money without regulatory safeguards.
FCA’s cryptocurrency approach hinders progress
The FCA has begun outlining its approach to regulating digital assets, publishing an indicative roadmap of key dates for the development and implementation of the UK's cryptocurrency regulatory regime. The roadmap details a series of intensive consultations aimed at promoting transparency and engagement in policy development.
Arun Srivastava, fintech and regulatory partner at Paul Hastings, told CryptoSlate.
“The UK was at risk of becoming an outlier, with the EU's MiCA regulation coming into full effect at the end of this year and the change of administration in the US ushering in a fresh, crypto-friendly approach in the US.
The new rules represent a major change to the UK's current regulatory framework, which operates under the Anti-Money Laundering Act, which focuses on financial crime. ”
The study also shows changes in consumer behavior. More individuals are considering cryptocurrencies as part of a broader investment portfolio, with 20% of participants citing influence from friends and family as the main reason for their purchase. The use of long-term savings to purchase cryptocurrencies increased from 19% in 2022 to 26% in 2024, while purchases using credit cards and overdrafts increased from 6% to 14% over the same period.
The FCA's analysis shows that recent events, including the crypto market crash in 2022, the cost-of-living crisis, criminal charges against the CEOs of major exchanges, and rising crypto valuations from the end of 2023 onward, will drive consumer demand for digital assets. This suggests that it is having an impact.
Notably, 26% of non-cryptocurrency users said they would be more likely to invest if markets and activities were regulated. The FCA acknowledges that regulation can influence consumer behavior and is considering ways to reduce risks associated with digital assets through policy action.
FCA Encryption Roadmap to 2026
According to the FCA's roadmap, the planned digital asset regulatory framework includes multiple phases spanning from 2023 to 2026. Key milestones include introducing financial facilitation rules, regulating the issuance and custody of stablecoins, introducing prudential standards, and establishing comprehensive rules on trading platforms, intermediaries, and lending. , and staking.
Matthew Long, Director of Payments and Digital Assets at the FCA, said:
“Our findings highlight the need for clear regulation that supports a secure, competitive and sustainable cryptocurrency sector in the UK. We embrace innovation and support market integrity and consumers. We want to develop a sector that is supported by trust.”
Following legislative changes, the FCA will be responsible for regulating digital asset promotion from October 2023. In its first year under the scheme, the FCA issued 1,702 warnings, removed more than 900 fraudulent crypto websites and removed more than 50 apps to combat illegal activity. Promotion targeted at UK consumers.
