Posted by Martin Bartlam, Michael McKee, Chris Whittaker and Marina Troullinou on 22 June 2021
Tagged to Cryptoassets, Cryptocurrencies, FCA, Regulation, Stablecoin, Trading

On 17 June 2021, the Financial Conduct Authority (FCA) published a Research Note on cryptoasset ownership. According to the Research Note, the FCA estimates that 2.3 million adults now hold cryptoassets (up from 1.9 million last year).

The Research Note also suggests that the level of overall consumer understanding of cryptoassets is declining with only 71% of participants in the research able to correct identify the definition of a “cryptocurrency” from a list of statements. Only 1 in 10 participants who had heard of cryptocurrencies were aware of consumer warnings on the FCA website.

Why undertake the research?

Cryptocurrencies are generally outside the scope of the FCA’s financial services regulatory perimeter. Whilst they take many forms, the most well known take the form of unregulated, transferable tokens such as Bitcoin, Ether and Ripple.

The Research Note contains no new FCA policy developments. Instead the FCA will use this better understanding of consumers’ attitudes and patterns of use to develop its thinking on the potential harms and benefits to consumers of cryptoassets.

The FCA has previously warned consumers that cryptocurrencies are very high risk, speculative investments and that consumers would be unlikely to have access to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if something goes wrong.

Equally for those that are seeking to use cryptoassets to make payments, the FCA has warned that they should be aware that the cryptoassets/associated services may not be regulated and that they are also unlikely to be protected if something goes wrong – for example, not having access to the FOS or the FSCS.

From January 2020, the FCA has exercised new regulatory powers to supervise how cryptoasset businesses manage the risk of money laundering and counter-terrorism financing. These cryptoasset businesses must register with the FCA and comply with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). For existing cryptoasset businesses prior to the go-live of this regime, the FCA has extended a Temporary Registration Regime from 9 July 2021 to 31 March 2022 to allow these businesses to keep trading whilst the FCA assesses their registration applications. The FCA has noted that a significantly high number of these businesses are not meeting the standards of the MLRs so have withdrawn their applications. For the remainder, the FCA will only register firms where it is confident that the firms have in place processes to correctly identify and prevent money laundering and terrorist financing.

HM Treasury is currently considering the results of a consultation on a new UK regulatory approach to cryptoassets and stablecoins.


The FCA research was undertaken between 5 January and 24 January 2021 with online participants recruited from YouGov’s high-quality proprietary research panel.

The FCA used the term “cryptocurrency” with participants instead of “cryptoasset” given the former term is more widely recognised by consumers.

The research included 2 specific sample groups:

  • Nationally representative sample: A nationally representative online sample of 2,568 participants were presented with a question as to whether they had heard of cryptocurrencies. Everyone who said they had heard of them (78%) then answered questions related to awareness and definition of cryptocurrencies, overall attitudes and plans for purchase. 146 people within this sample were former or current cryptocurrency  users (being those who currently own, or who have previously owned, a cryptocurrency);
  • Additional cryptocurrency users sample: A longer version of the questionnaire was shown to an additional boost sample of 994 individuals, all of whom were current or previous cryptocurrency users. This boost guaranteed that the longer questionnaire was put to a large enough sample of current or previous owners of cryptocurrencies to enable reporting.

The FCA Research Note follows a previous FCA quantitative online research study published in June 2020. Results of the Research Note are compared with this prior study of last year’s consumer ownership and awareness findings.

Key Insights from the Research Note   

Public Awareness: 78% of adults said they had heard of cryptocurrency, up from 73% in the previous year but overall understanding of cryptocurrency has declined from 2020. Only 71% of those who had heard of cryptocurrencies were able to correctly identify its definition from a list of statements,  a statistically significant decline of 4% from 2020.

Ownership: The FCA estimates that 2.3 million UK adults own cryptocurrency. The medium holding has risen from GBP260 to GBP300. The profile of a cryptocurrency user is unchanged – they remain largely male, over 35 years old and at AB social grade.

Motivation: Consumers are now less likely to cite cryptocurrency as a gamble when considering their reasons for purchase (down 9 percentage points to 38%) and are more likely to see them as an alternative or complement to mainstream investments. Those who are persuaded by advertisements to purchase cryptocurrencies are more likely to regret their purchase.

Purchase & Engagement: Most consumers continue to use an exchange to purchase cryptocurrencies and use their own disposable income to pay for it. 29% of consumers check their balance daily, up from 13% last year.

Looking Ahead: Approximately half of cryptocurrency users plan to purchase more. There are limited signs of enthusiasm or understanding for stablecoins as 46% of cryptocurrency users are unclear on their benefits.

The authors

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