On 7th March 2019, the FCA published two pieces of research it had commissioned on consumers’ attitudes and awareness of cryptoassets. “Cryptoassets” generally refer to cryptocurrencies (like Bitcoin) as well as other digital assets secured cryptographically.
The first, produced by research firm Revealing Reality, explored the attitudes, understanding, motivations and beliefs that underpin and influence peoples’ decisions to buy cryptoassets (click here to read the full report). The research was undertaken by speaking with a range of cryptoasset consumers and conducting 17 follow-up interviews. The second was a wider consumer survey research report by Kantar TNS to assess ownership and attitudes to cryptoassets in the UK by examining a sample of 2,132 UK consumers (click here to read the full report).
Both pieces of research had been commissioned in the aftermath of the FCA, Bank of England and HM Treasury joint report, issued in October 2018, which set out the UK’s policy and regulatory approach to cryptoassets and Distributed Ledger Technology.
The FCA has now published a summary of the key findings from both pieces of research. The summary includes the following insights:
- many consumers see cryptoassets as a fast-track to easy wealth: consumers buying cryptoassets are often looking to ‘get rich quick’. Many of the interviewees in Revealing Reality’s research perceived cryptoassets as a shortcut to easy money. Interviewees often cited influence from others, including social media, as motivation for speculating;
- many consumers may not fully understand what they are purchasing: over 70% of those surveyed by Kantar TNS had not heard of cryptocurrencies or did not know how to define one with many interviewees overestimating their knowledge of the product. Many consumers also seemed to have a sense that they were investing in a tangible asset due to the language and imagery associated with cryptoassets (such as ‘mining’ and ‘coin’);
- there are signs that cryptoassets are accompanied by risky behaviours: interviewees told researchers that they were distrustful of mainstream media or official sources of information in relation to advice available on cyrptoassets. Often consumers did not complete due diligence prior to purchasing, with 16% of crytpocurrency owners in the Kantar TNS survey doing no prior research. While some consumers were aware of risks (e.g. price volatility) they admitted that this riskiness was part of the attraction of buying cryptoassets. Furthermore, many of those purchasers surveyed did not appear to have any strategy to sell their cryptoassets or a sense of what would motivate them to do so; and
- anecdotal evidence may overstate harm: the FCA noted that purchasers of cryptoassets were a small minority of UK consumers, with only 3% of consumers surveyed having ever brought cryptoassets. The Kantar TNS survey identified that around half of those who bought cryptoassets spent under £200 and noted that most consumers used their own disposable income (none of those surveyed said that they borrowed money). Out of the consumers who had never bought cryptoassets, only one in 100 people told the researchers they would definitely buy in the future. The term ‘cryptocurrency’ was most recognised by men aged 20-44 years old in the middle-class and upper-class social grade.
The FCA plans to continue its research on consumer attitudes and awareness of cryptoassets and later this year it will publish a consultation on a proposed ban of certain cryptoasset derivatives to retail investors.