UK Financial Regulator: Crypto Investors Are Driven by Interest to 'Get Rich Quick'
The U.K. Financial Conduct Authority has published two studies on crypto, revealing that U.K. consumers lack knowledge of the industry.
The first study, conducted by research firm Revealing Reality, uses qualitative interviews to focus on the understanding of cryptocurrencies and motivations behind people’s decisions to invest in crypto assets. The researchers interviewed 31 crypto consumers and selected 17 of them for a follow-up interview.
According to the interviews, many see cryptocurrencies as a way to “get rich quick” and a shortcut to wealth and easy money. Those who share this stance often mention others’ behaviour in social media as a motivation for investing.
Moreover, most of the respondents showed a lack of understanding of cryptocurrencies. For instance, some of those interviewed did not realize they can buy a part of a coin instead of buying an entire one.
Finally, Revealing Reality finds that crypto assets are accompanied by risky behaviour, i.e., investors do not seem to conduct enough research prior to their first purchase of crypto, mostly relying on influential recommendations.
Another survey, conducted by a research agency Kantar TNS in December 2018, involved 2,132 U.K. consumers. They were asked several questions regarding their awareness of crypto assets, as well as purchasing habits.
Only one quarter of the respondents, mostly men aged 20-44, could identify what cryptocurrencies are, while 58 percent never heard of the concept. 23 percent of the interviewed claimed they first heard about crypto from online news, while 22 and 16 percent received information from traditional media or friends/family respectively.
Profile of U.K. consumers that understand cryptocurrencies. Source: FCA (fca.org.uk)
Only 51 people of 2,132 survey respondents had ever bought cryptocurrency. Half of them admit to have conducted general research prior to the purchase, while 25 percent were happy with just discussing it with friends, family or colleagues. Just as in the previous study, some of the investors (31 percent) see cryptocurrencies as a gamble that could help them earn money.
Based on the results of two studies, the FCA has warned U.K. consumers about the risks related to crypto assets, reminding them that they are not regulated in the country. According to the FCA, investing in crypto could lead to losing all funds due to the high volatility in the market.