Cryptocurrencies boom as Brits throw caution to the wind

Bitcoin trading

The number of Britons who own cryptocurrencies has risen to an estimated 2.3 million amid signs that fewer consumers believe that putting money into the nascent market is a gamble.

The Financial Conduct Authority said yesterday that its latest research indicated that about 400,000 more adults had recently bought bitcoin and other cryptoassets. The regulator’s survey suggests that 4.4 per cent of the adult population hold cryptocurrencies, up from 3.9 per cent in 2020.

The median holding has risen to £300, from £260, and the biggest investment by value reported to the survey was £7 million, up from £30,000 a year ago.

Even though ownership is rising, the watchdog found that the public’s understanding of the assets was falling. Its research also showed that 14 per cent of consumers had borrowed to invest in the cryptomarket, trends that are likely to worry regulators.

Cryptocurrencies such as bitcoin exist only as strings of computer code and, unlike conventional forms of money, are not controlled by governments or central banks. The FCA believes that these assets have no inherent value and that their high volatility puts consumers at risk.

Cryptocurrencies are mostly unregulated. If investments blow up, consumers are unlikely to be eligible for redress from the Financial Services Compensation Scheme, the lifeboat fund for the investment industry.

Global regulators are also concerned that the cryptomarket is exploited by money launderers and other criminals.

Rick Eling, investment director at Quilter Financial Planning, part of Quilter, the wealth manager, said: “The fact that participation in cryptocurrencies is up but understanding is down paints a troubling picture.”

The FCA’s findings are based on an online survey of 2,568 people, of which 146 were former or present cryptoasset investors. This sample was topped up with 994 people who owned or had previously had owned digital assets.

Bitcoin rose from just under $29,000 at the start of the year to more than $64,000 in April, but is now back below $39,000.