FCA Head Flags Youngsters Entering into Crypto Investments ‘Highly Risky’
The UK’s financial watchdog has cautioned that too many youngsters under 35 in the country are investing in crypto. According to Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), these investments are “very highly risky,” and they could lose all their money.
Rathi shared that the number of Britons owning shares directly is “significantly lower” when compared to that of the US or Sweden. Speaking to MPs on Tuesday, he advocated for more investment in shares and bonds as a part of FCA’s strategy for the next five years.
FCA would help consumers invest more in equity or bond markets to achieve higher long-term returns, he added.
“One thing I think is not great is the sheer number of under 35-year-olds for whom the financial product that they invest in first is crypto — several million in the UK — rather than equities or debt or other types of products,” Rathi noted.
UK’s Increasing Crypto Investor Base
The FCA found out that there is more awareness of crypto among citizens. 93% are well-informed about cryptos, which has increased from 91% recently. Further, 12% of UK adults now own crypto, up from 10% in previous findings.
The 2024 Global Crypto Adoption Index by Chainalysis has ranked the UK in the 12th place among the top 20 overall rankings.
Additionally, crypto remains largely unregulated in the UK and is high-risk. “If something goes wrong, it is unlikely you will be protected, so you should be prepared to lose all your money,” the FCA wrote last year.
However, the regulator has laid out clear requirements for companies to register with the FCA, ensuring that they comply with anti-money laundering rules.
“We have also evolved a particular approach to risk and compensation in the UK, which perhaps isn’t matched in other parts of the world,” Rathi said.
UK Has a “Low Level” of Share Ownership: FCA Head
According to Rathi, due to “a mix of tax, education, regulation, and broader culture,” in the UK, there has been a “low level” of share ownership among citizens.
The FCA, as a part of its new strategy, is committed to “deepen trust, rebalance risk, support growth, and improve lives.” Rathi added that the regulator would explore nascent technologies like AI to be more efficient in supporting economic growth by enabling investments.