One in Five Britons Now Owns Digital Assets
The Financial Conduct Authority (FCA), a UK governmental agency that also regulates the crypto industry, has revealed that the number of cryptocurrency holders in Britain has doubled in the past year.
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The United Kingdom is renowned for its receptiveness towards digital assets, positioning itself as a crypto-friendly jurisdiction. However, the country also recognizes the importance of regulating crypto-based companies operating within its borders. Encouraged by the acceptance of MiCA in the European Union (from which the UK recently departed), the government and regulators aim to revamp the crypto-related legislative framework by October 8, 2023. This objective is primarily fueled by the necessity to curtail misleading advertisements of questionable crypto projects and token sales of potentially fraudulent assets. With the escalating growth rate of digital asset ownership in the country, the British government acknowledges the pressing need for prompt action.
Rishi Sunak, the current Prime Minister, has consistently shown support for cryptocurrency legalization and the establishment of a European crypto hub within the UK. Even during his tenure as the Finance Minister last year, Sunak emphasized the importance of developing appropriate legal frameworks to accommodate cryptocurrency operations. Now, as Prime Minister, he has taken decisive action to prioritize this matter, moving it from the back burner to the forefront of his agenda.
The number of UK citizens owning crypto assets has doubled in the past year
In a 2022 survey overseen by the Financial Conduct Authority (FCA), only 10% of participants from the UK admitted to owning cryptocurrency. However, a similar survey conducted just a year later revealed a significant increase, with the figure jumping to 20%. Interestingly, this surge in digital asset popularity coincided with the collapse of several major players in the cryptocurrency market, including Terra (LUNA), centralized crypto exchange FTX, and hedge fund Three Arrows Capital, also known as 3AC.
It is up to people to decide whether they buy crypto . . . Our rules give people the time and the right risk warnings to make an informed choice
said Sheldon Mills, the FCA’s head of consumers and competition
The most popular cryptocurrencies among Britons
When it comes to the cryptocurrencies of choice among Britons, there aren't many surprises. Bitcoin still leads the pack, holding the top spot in the investment portfolios of many UK citizens. Following Bitcoin, the most preferred cryptocurrencies are Ethereum (ETH), Ripple (XRP), Binance Coin (BNB), and Cardano (ADA), despite the last three currently being under the watchful eye of the American regulator, the SEC.
Ethereum has captured the interest of British investors thanks to its features, which include smart contracts, asset tokenization platforms, and support for decentralized applications (dApps). Stablecoins, due to their ties to fiat currencies and low volatility, also enjoy a fair share of popularity among Britons.
The significance of regulating advertisements
Aside from an increase in cryptocurrency ownership, the FCA has identified that roughly 36% out of the 2000 people surveyed have seen or heard advertisements about cryptocurrencies. Moreover, the survey disclosed that 25% of those who previously had no interaction with cryptocurrencies became interested due to the impact of these ad campaigns.
Such results underscore the crucial role that advertising plays in raising financial literacy, and awareness about the function of cryptocurrencies, and in broadening cryptocurrency adoption overall. Yet, the FCA stands firm on the position that it's necessary to filter and validate such ads to preclude potentially fraudulent schemes from penetrating the market, which could pose a threat to British investors.
Legislative updates with cryptocurrencies in mind
Bankruptcies among crypto companies, most notably the FTX exchange, have spurred numerous countries to legalize cryptocurrencies, aiming to integrate this emerging asset class into a regulated legal landscape and provide protection for investors. While US regulators continue to lead relentless investigations rather than striving to improve existing legislation, both the EU, with the assistance of MiCA, and the UK are seeking to instigate significant changes in how digital assets are regulated.
Starting from October 8th of this year, the Financial Conduct Authority (FCA) will implement new regulations that specifically target cryptocurrency startups and their marketing practices. These regulations aim to ensure investor protection and transparency within the industry. The legislation will require cryptocurrency companies, regardless of their domestic or international status, to provide detailed information to investors regarding potential risks associated with digital assets. Additionally, a 24-hour cooling-off period will be introduced, giving investors time to reconsider their investment decisions. Furthermore, the new guidelines will prohibit reward-based referral programs like the popular “Bring a Friend” scheme.
These regulations will apply to all companies promoting digital assets to UK citizens, irrespective of their geographical location.
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