A significant boom in cryptocurrency buyers was recorded in the UK from 2019 to 2020. People who have bought cryptocurrencies at some point, from 1.5 million registered in 2019, went to 2.6 million in 2020, representing an increase of 42%, says the study published Tuesday by the UK Financial Conduct Authority (FCA).
The investigation is part of a joint effort by the FCA, the Bank of England and other government agencies. FCA Managing Director Sheldon Mills said the growing popularity of cryptocurrencies among British consumers "highlights the importance of this agency's work in reaching a better understanding of that market and how people interact with those assets" .
For the FCA, "Most respondents are familiar with cryptocurrencies, are aware of the lack of a regulatory framework for cryptocurrencies, and understand the risks of volatility." However, the study notes, some 300,000 cryptocurrency holders believe they are protected. "This leaves them at potential risk of financial harm," the regulator warns.
Study highlights
The FCA estimates that 3.86% of the population has acquired cryptocurrencies. This corresponds to 1.9 million of the British population over 18 years of age, estimated at 50 million. 75% of consumers who have cryptocurrencies with equivalent funds that are less than GBP 1,000, approximately USD 1,240.
The most popular reason for buying cryptocurrencies (47% of respondents) was "as a gamble where you could win or lose money", from which it follows that cryptocurrencies are perceived as volatile. In second place (25%) were cryptocurrencies "as part of a more diverse investment portfolio."
FOMO also appeared as a motivator for the acquisition of cryptocurrencies: "I do not want to be left out of the purchase of cryptocurrencies" (22%). At the bottom of the list of preferences, two reasons stand out that can be seen as coming from more informed people about cryptocurrencies. "As part of a long-term savings plan (17%)" and "For political or ideological reasons, or mistrust of the financial system (17%).
When respondents were presented with the list of cryptocurrencies, to find out which ones were better known, Facebook's Libra was included despite the fact that it is a project that has not yet been launched. Pound was the second most popular currency, with 22% of respondents having heard of this currency, albeit with almost a quarter of bitcoin's popularity (78%).
In addition to decreasing the percentage of people consulted who had not heard of cryptocurrencies, compared to 2019 (27% compared to 58% last year), 9 out of 10 could identify the correct definition of cryptocurrency and claimed to have carried out some type of Research before acquiring cryptocurrencies.
These latest figures reveal that many of those who own cryptocurrencies have the basic knowledge about them and are also aware of the lack of regulatory protections, says the FCA.
As for places of purchase, 77% of cryptocurrency holders acquired them from exchange houses, of which only 17% use UK-based exchanges. 23% of cryptocurrency holders acquired them through unspecified channels.
Advertising is one of the main motivators with the ability to influence consumer sentiment, the study says. "Traditional media and online news are also impacting consumer behavior."
"45% of all current and former cryptocurrency holders said they had seen an advertisement for cryptocurrencies. Of these, 35%, approximately 400,000 adults, said that advertising made the purchase more likely. 6% of current and former holders of cryptocurrencies were influenced by an advertisement.
Adoption boom
Among the findings of this research, the FCA highlights a significant increase of 3% of the adult population in the FCA Consumer Research of 2019, to 5.35% this year who have or have had cryptocurrencies. "This represents an increase of 2.35 percentage points, from approximately 1.5 million to 2.6 million people."
This year, 27% of the surveyed sample had not heard of cryptocurrencies, compared to 58% in last year's study. "This represents a statistically significant increase from 42% to 73% of adults." The role of the media in increasing awareness of cryptocurrencies in the population, says the FCA, has increased.
A recent study by the consultancy Edelman in the United States and China concluded that the population should be educated more about cryptocurrencies and blockchain to increase confidence in these types of assets. The study focused on the benefits for companies in the cryptocurrency sector when they manage to gain the trust of consumers, employees, regulators, investors and the market in general.
