The findings of the FCA’s Cryptoasset Consumer Research Note reveals an increase of crypto owners who monitor the value of their holdings on a daily basis from 13% in 2020, to 29% in 2021. However, the proportion of people who say they have never checked remains at 12%.
Generally, the findings of the FCA’s note for 2021, published on 17 June, show that awareness and ownership of cryptocurrencies is on the rise, despite previous strong warnings from the FCA about their risks and speculative nature.
It seems that public confidence in cryptocurrencies is growing, and the report suggests that investors are less likely to see them as a gamble and more of a complimentary investment alongside mainstream assets. With an eye to the future, approximately half of those surveyed indicated they planned to buy more, with a similar number predicting that they ‘know they’ll make money at some point’.
This certainty may well have been buoyed by the recent performance of the cryptocurrency stalwart, Bitcoin. The report highlights the rise in value of bitcoin from USD$7,000 at the end of 2019 to a peak of USD$60,000 in early 2021, before falling to around USD$38,000 as of the time of the report. With such dizzying numbers being recorded, it is no surprise that confidence is high.
On the other hand, however, the report also suggests that the overall level of understanding of cryptocurrencies is dipping, which may in part be due to the number of currencies on the market. Bitcoin remains the most recognised, but beyond this, recognition of other currencies and perhaps an understanding of what is on offer begin to wane.
This has led to the report suggesting that some may not fully understand what they are buying. With this in mind, the fact that most of those surveyed use an exchange for dealing with their investments highlights the pressing need for the regulatory approval process for companies who deal with cryptoassets to be resolved, and quickly.
The FCA recently announced an extension to the Temporary Registration Regime, which allows further time for the significant number of businesses to continue trading, whilst still awaiting regulatory approval from the FCA. The fact that only 5 firms have thus far received approval (with over 150 waiting in the wings) highlights the scale of the problem.
There have been arguments put forward on both sides as to the reasons for the delay. Either firms aren’t reaching the stringent standards required for approval, or the bar has been unfairly set too high.
We have previously commented in more detail about this issue in our Crptoassest: temporary registration regime extended article.
Whatever the reasons, the survey confirms that the public are embracing cryptocurrencies in ever greater numbers, which increases the need for regulatory protection. Everyone involved will need to up their game to provide a degree of certainty in what is a volatile yet vibrant market.
If any company would like assistance with the regulatory approval process, then our team at Gherson can provide practical advice and guidance.
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The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.
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