The financial services regulator also observed a significant increase in the ownership of cryptocurrencies in the country
According to the Financial Conduct Authority (FCA), an estimated 2.6 million people in the UK have bought cryptocurrency, with a significant increase over the last 12 months.
After online research conducted by YouGov, the FCA estimates that 1.9 million people continue to hold cryptocurrency — with around half of them holding more than £260 in digital currency.
The study also found that while most crypto owners in the UK are knowledgeable about the asset, many do not realise that they remain unprotected and unregulated.
The research carried out by the FCA was meant to gain an understanding of the size of the market in the UK, as well as consumer attitudes to cryptocurrencies. The online survey showed that 83% of owners who responded bought their cryptocurrency through exchanges not based in the UK.
Around one third out of the 2,600 people that were surveyed said that adverts made them more likely to purchase cryptocurrency.
However, the FCA also found that many crypto enthusiasts are leaving themselves open to potential financial losses. Based on the findings from the survey, an estimated 300,000 people who own cryptocurrencies mistakenly believe that they are protected.
“Many are not currently regulated in the UK. This means the transfer, purchase and sale of such tokens currently falls outside our regulatory remit, leaving customers unable to make complaints to the Financial Ombudsman Service or seek protection from the Financial Services Compensation Scheme.” the FCA explained.
The interim executive director of strategy and competition at the FCA, Sheldon Mills, said that the report revealed the increase in popularity for cryptocurrencies among UK consumers. It also highlighted the need to provide a deeper understanding of the market and how people worked with these assets.
“Cryptoassets present risks and opportunities for consumers, and we hope these insights will help inform the policy debate in the UK and internationally as the use of these assets continues to grow,” Mills said.
During the March 2020 Budget, the UK Government expressed its intention to consult on measures that would bring certain cryptocurrencies within the scope of financial promotions regulation.
Recently, the UK High Court ordered the closure and wind-up of a scam cryptocurrency platform named GPay, where investors lost over £1.5 million to the firm.
Many customers who were lured in by the firm that said they fell for the company’s fraudulent advertisements, which featured fake endorsements from celebrities and websites.