A third of Britons would consider cryptocurrency like bitcoin if it was regulated

More than a third of Britons are not interested in buying cryptocurrencies due to a lack of regulation in the sector, according to new research.

About 34 percent of the population and three quarters of the people in their thirties who are familiar with Bitcoin, Ethereum, and Dogecoin said better consumer protection would make them more likely to invest.

According to an exclusive study conducted by the Coinbase cryptocurrency exchange for This is Money, half of those surveyed between the ages of 30 and 39 said more accessible information would pique their interest in investing.

Wild West: Cryptocurrency trading is currently not regulated by the FCA

Charlie Barton of Finder’s personal financial comparison site said, “It makes sense for people to want a little more learning and reassurance that there is regulatory oversight before they make an investment.”

Investing in cryptocurrencies has become increasingly popular with everyday and institutional investors alike, which has helped drive the prices of crypto assets like Bitcoin to record highs in recent months.

In the UK, however, the industry is still unregulated and this, coupled with the high volatility of bitcoins, means it can resemble a Wild West.

Since hitting an all-time high of more than $ 63,000 per coin in mid-April, Bitcoin price has fallen 46 percent in recent weeks and is currently around $ 36,000.

The city’s regulator, the Financial Conduct Authority, has warned consumers that they “should be prepared to lose all of their money” when making such “very risky, speculative purchases”.

It has also banned everyday investors from buying crypto derivatives that track price but do not give investors property and can help increase losses.

Bitcoin has exploded since last March but has been on a wild ride lately, with the price falling 46% since its last high in mid-April

Cryptocurrency exchanges that allow investors to buy Bitcoin, Ethereum, and a host of other crypto assets are currently only regulated by the FCA for money laundering and terrorist financing purposes.

This means that while some are on a list of regulated platforms, those with money on them will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme safety net if something goes wrong.

Some banks have also banned investors from sending money to cryptocurrency exchanges amid growing concerns about “get rich quick” cryptocurrency scams.

Two out of five don’t really know what crypto is as the fear of fraud grows

Coinbase’s results also showed that a significant proportion of people who claim to be “somewhat familiar” with crypto assets don’t really know what they are.

Two out of five said they did not know what it is or how it is created, namely through “mining” with computer programs, which is 63 percent of those over sixty.

Only 4 percent of 60 to 69 year olds said they had a good understanding of what cryptocurrency is.

These results are particularly evident in the face of growing fraud concerns.

According to the Action Fraud fraud reporting center, between April 2020 and March 2021, almost 45 percent of investment fraud cases involving social media platforms involved investments in cryptocurrencies.

Often these are fake celebrity endorsements, like this bitcoin scam that we reported on in 2019.

According to Action Fraud, there have been a total of 5,039 reports of investment fraud originating from social media platforms, with victims losing an average of £ 12,500.

Meanwhile, high street bank NatWest said it had received a record number of cryptocurrency fraud reports in the first three months of this year.

The FCA said potential investors should be “extremely careful” before investing.

“Make sure you review and carefully examine the crypto asset business,” it said on its website.

“You should know who you are dealing with and whether a crypto asset is appropriate, especially given the risk of such products.

“For example, if you are entering into a business relationship, consider whether the company is based in the UK or is registered with us.”

Glen Goodman, an investor and author of The Crypto Trader, said, “I am not surprised that so many are reluctant to invest in crypto because it is not protected by the FSCS.

“If you invest in the stock market and the trading platform goes bust – and takes your money – you are entitled to compensation of up to £ 85,000. If the same thing happens to a crypto platform, you can lose it all. ‘

However, FSCS protection does not cover investors if their investments lose money or those companies go bankrupt, only if the platform does.

And this is only the case if an investment platform or a provider is regulated by the FCA or the Prudential Regulation Authority of the Bank of England and thus the FSCS. It is important to check the FSCS website as well as that of your investment provider to make sure you are covered.

Barton added, “The stat that caught the eye was that 75 percent of the 30s wait for regulation before investing in crypto. These people are in a unique position.

“For them, it may not be a“ YOLO ”switch to cryptocurrency – this is more for people in their late teens and twenties who can take the risk and have to make money for a lifetime.

“However, people in their thirties may want to settle down, have a family, and buy a house, and betting on“ fake internet money ”is a huge risk.

In the meantime, they are too young to have benefited from the wage increases, lower house prices and more generous pension systems of the older generations. ‘

Stablecoins, a type of crypto asset pegged to an existing currency such as the pound or dollar and used for payments, are currently being consulted by the government as a form of payment, the FCA said.

If adopted, the FCA would likely work to regulate the sector and provide consumer protection.

Marcus Hughes, Managing Director of Coinbase for Europe, said of the results, “It is important for us to understand why some consumers are reluctant to crypto so we can help demystify the space and build their trust.

“Unsurprisingly, a perceived lack of regulation around cryptocurrencies is unsettling some people.”

Currently, only four cryptocurrency exchanges are fully registered with the FCA.

Dozens more, including well-known names like eToro and Revolut, have been added to a temporary authorization register introduced late last year.

This was supposed to expire next month, but was extended to March 2022 on Thursday morning to give the exchanges more time to work with the regulator.

Coinbase is not listed on the FCA exchange as it provides crypto services to UK customers from an Ireland-based company called Coinbase Europe.

It will soon register with the Central Bank of Ireland as it is implementing a registration system similar to that of the FCA.

Hughes added, “If the industry is to gain the trust of a wider public, it is imperative that further regulations are consistently implemented in all areas.”

Goodman added, “The sensible thing is to buy crypto through a platform and then transfer it to your own private virtual wallet for protection. The problem is that this is a fiddly process and people sometimes lose their passwords and their cryptocurrency.

“It would be a lot easier if the FCA extended their protective shield to crypto investors so that they could invest with the security of the FSCS using intuitive platforms and apps.”

Charlie Barton also agreed that crypto asset investments “need more regulatory infrastructure”.

When asked by This is Money if it would consider doing this in light of the results, the FCA said its mandate was a government matter.

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