Most young investors in the United Kingdom are entering the crypto market thanks to the hype on social media and news, but they are not aware that the market is not regulated, a new study published by the U.K. Financial Conduct Authority (FCA) revealed.
The survey revealed that a majority (69%) of the investors under the age of 40 mistakenly believe that crypto markets are regulated. More than three-quarters (76%) of young investors who put money on risky assets like cryptocurrencies, forex or crowdfunding are driven by competition with friends and family.
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The financial watchdog surveyed 1,000 British investors aged between 18 and 40 who invested in high-risk investment products in a bid to promote its five-year InvestSmart campaign, The Independent reports. Launched with a $15 million budget (£11 million), the campaign aims to raise awareness among young people about high-risk investments. The FCA estimates that more than a million investors in the U.K. have bought high-risk investments during the COVID-19 pandemic.
The research found that more than half of the participants use social media, other people, and news stories as key drivers when investing in specific products. While a majority prefera more stable returns than dramatic price movements, only 21% consider holding their most recent investment for more than a year.
Commenting on the results, FCA executive director of markets Sarah Pritchard stressed that more people are chasing high returns with higher risks. “We want to give consumers greater confidence to invest and help them to do so safely, understanding the level of risk involved,” she added.
Related: Poll shows Brits concerned over the prospect of a digital pound
The FCA survey follows Jon Cunliffe’s remarks on crypto regulations. Cunliffe, deputy governor for financial stability at the Bank of England, urged regulators to pursue crypto as a matter of urgency.
Cunliffe said that the price volatility of crypto assets “could trigger margin calls on crypto positions forcing leveraged investors to find the cash to meet them, leading to the sale of other assets and generating spillovers to other markets.”
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