Yahoo Finance Seven in 10 Brits mistakenly believe cryptocurrencies are regulated
The majority (69%) of Brits believe the Financial Conduct Authority (FCA) is in charge of regulating cryptocurrencies, a new study has shown.
As a result, new investors were unlikely to understand the lack of protection and the risk to their money when investing.
The research, released on Wednesday, surveyed 1,000 people aged between 18 and 40 who invest in high-risk investment products.
The survey also found that 58% of those investing in high risk financial products say hype on social media and in the news lies behinds their investment decisions.
Alongside this, 76% of those aged under 40 who have invested in high-risk products such as cryptocurrency and forex say they were driven by competition with friends, family and acquaintances and their own past investments.
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As the FCA launches an £11m ($15.2m) InvestSmart campaign, designed to help consumers identify the risks cryptocurrencies may pose, it found that few of the high risk investors it surveyed were investing for the long haul.
Just one in five respondents (21%) were considering holding their most recent investment for more than a year, and less than one in 10 (8%) for more than five years.
This is despite 60% of those surveyed saying that they prefer more stable returns than investments that rise and fall dramatically, investments that typically come with lower returns requiring longer investment.
This comes as over 1 million UK investors (6%) increased their holdings, or bought a high-risk investment during the pandemic (April-October 2020).
The regulator is concerned that new investors are increasingly accessing higher-risk investments which may not be right for them, or reflect their risk tolerance.
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The FCA's five-year InvestSmart campaign is intended to target those who are inexperienced at investing, possibly dipping their toe for the first time. It aims to reach those investors through social media and online, where much of the hype around investment happens.
The regulator is encouraging consumers to be InvestSmart when thinking about investing. In particular, it recommends:
‘Five important questions to ask yourself before you invest’:
Am I comfortable with the level of risk?
Do I understand the investment being offered to me?
Are my investments regulated?
Am I protected if the investment provider or my adviser goes out of business?
Should I get financial advice?
Watch: What are the risks of investing in cryptocurrency?
