UK consumers do not need to discover the full benefits of cryptoassets according to Dan Howitt, managing director and co-founder of cryptocurrency accounting platform Recap, reacting to a report from the UK’s Financial Conduct Authority (FCA) into attitudes towards cryptocurrency.
“The pound is stable, if you lived in Venezuela, where inflation is 10,000,000% you’d have a need.”
In the survey, 70% of respondents said they had not heard of cryptocurrencies, or did not know how to define them, while only 3% said they had purchased a cryptocurrency. Of those who had, a third have stopped monitoring the value of their cryptocurrency after investing. 40% said they expected to hold on to it for three or more years.
“Cryptocurrency is still in its infancy,” said Howitt, in an email. “There are a lot of parallels to be drawn from the early stages of the internet, tech specialists and developers worked in ecosystem, but it took time and a raft of user-focused products to break into the mainstream market.”
The most popular reasons cited for buying cryptocurrencies were as a gamble (31%), or as part of an investment portfolio (30%). Traders expect to make money quickly – this was cited by 18%, while a more psychological reason – fear of missing out – was given by 4% of respondents. The main reasons cited by respondents for not buying cryptocurrency were perceived risk and lack of knowledge.
“We still don’t have a UK cryptocurrency exchange mainly because of the challenges associated of cryptocurrency start-ups acquiring business banking services,” said Howitt.
The FCA survey found that a majority of users spent less than £200 on digital assets. 50% of those who did purchase cryptocurrency opted for bitcoin, while 34% chose ethereum.
“ING research into cryptocurrency suggests that people are generally cautious about investing in digital currencies, dispelling ideas that bitcoin might be an alternative ‘safe’ investment. Cryptocurrency is considered more risky than most other assets,” said Jessica Exton, behavioral scientist at ING, in an email.
“Perceptions of cryptocurrency depend on multiple factors such as familiarity with technology, risk attitudes, media coverage and what friends are doing. Indeed, expectations of how cryptocurrency will be used in the future differ across the 15 countries we surveyed last year. The UK was relatively pessimistic, with one in four agreeing that cryptocurrency would be the future of spending online or the future of investment. This compared to a European average of one in three.”
The FCA’s research was published as a follow-up to a joint report it carried out with the Bank of England and HM Treasury. It highlighted there were three major risks factors associated with cryptoassets: a potential impact on market integrity, its use for financial crime, and its effect on consumers.
“As the FCA has said, this [consumer] survey is anecdotal. I can’t see this survey having any impact,” said Howitt. “If anything, it shows that there isn’t an immediate need to regulate the industry as the average consumer isn’t in the market yet.”
The FCA is set to consult on the text of its joint report until April 7, after which it will produce a final version in summer. According to the document, HM Treasury also expects to consult on whether to extend its own regulatory boundaries to cover cryptoassets.
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