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Attempts by the UK regulator to warn consumers about cryptocurrencies have had no impact, with experts calling the latest data on the industry “terrifying.”
The Financial Conduct Authority has stepped up its warnings about the risks to investors in the industry in recent months, repeatedly raising the possibility that consumers will lose all of their money if they back a cryptocurrency.
New research from the watchdog suggests that these warnings have proven ineffective, however.
Figures released by the FCA on June 17 showed that only 1 in 10 people who had heard of cryptocurrencies were aware of the consumer warnings on the FCA website.
Although the regulator’s document showed the British to have a largely positive view of cryptocurrencies, FCA research showed that the UK crypto industry has a dark underbelly with the potential for widespread harm to consumers, said said AJ Bell analyst Laith Khalaf.
The fact that 14% of crypto buyers have borrowed to invest is simply terrifying, Khalaf said of the data.
The extreme volatility and uncertain long-term outlook for crypto means that holdings can be wiped out, leaving borrowers only their debt to remember. About one in five crypto buyers say they are driven by FOMO [fear of missing out], which is never a good motivation for financial decisions.
FCA has been contacted for comment. The published data was collected from a survey conducted in January by the regulator, before the latest boom and slowdown in cryptocurrency prices.
READCrypto Ownership Grows As 2.3 Million Brits Support Digital Currencies
A major rally began in February after Tesla invested in bitcoin, pushing the token as high as $ 64,829 in April before it experienced several lightning crashes. Following a recent “death cross,” bitcoin fell to $ 28,814 on June 22.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the watchdog is now on alert, sensing a new danger as consumers turn to cryptocurrencies as a form of investing their money. hard earned for future returns.
The watchdog is clearly concerned that the message is not getting through, Streeter wrote in a note following the data, which also showed that among those who had seen the warnings, 44% said they didn’t ‘had no effect on their plans to hold or purchase tokens.
[Bitcoins] volatility which makes the regulator extremely nervous. There is a danger that due to so many posts and tips circulating on social media, people have been persuaded to invest emergency savings to make money fast, leaving them without a safety net. financial.
Even crypto advocates said research showed the regulator had more work to do to ensure the public is well informed about the risks, with more than 2.3 million Britons having invested in cryptocurrencies. at the time.
READBitcoin Falls Below $ 30,000 For First Time Since January On Data Death Cross
For investors who commit to the proposal and invest for the long term, this is not a problem, as the baseline scenario remains the same, said Dan Moczulski, UK Regional Director and Head of Business Development at the eToro crypto trading platform. However, anyone who buys on real momentum needs to think again, do their research, and decide if they believe in the reasoning behind investing, and not just the price movement.
Calls have been made for the FCA to speed up the regulation of companies that trade or have exposure to crypto assets, after several significant delays in its authorization process. Only a handful of companies have received FCA approval under its temporary registration scheme, a program developed to help the watchdog deal with a backlog of applications while many still wait behind the scenes. .
The fact that most people surveyed use an exchange to manage their investments highlights the urgent need to resolve the regulatory approval process and quickly for companies that deal with crypto assets, said Neil Williams, lawyer specializing in crypto assets. white collar crime at Mayfair. Gherson Solicitors law firm.
Arguments have been made on both sides as to the reasons for the delay, either companies fail to meet the stringent standards required for approval or the bar has been unfairly set too high. Whatever the reasons, the survey confirms that the public is increasingly adopting cryptocurrencies, which increases the need for regulatory protection.
To contact the author of this story with comments or news, email Emily Nicolle
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