The main findings from the FCA’s study highlight:
- An increase in public awareness of cryptocurrencies;
- A rise in ownership of cryptocurrencies, although the profile of cryptocurrency users remain broadly unchanged since 2020;
- Users are likely to see cryptocurrencies as an alternative or complement to mainstream investments rather than a gamble;
- Most consumers continue to use an exchange to purchase their cryptocurrencies and use their own disposable income to pay for it;
- Half of users intend to buy more cryptocurrencies in the future; and
- There are limited signs of enthusiasm or understanding for stablecoins.
The study primarily examined attitudes towards unregulated, transferable tokens which includes some of the most well know cryptocurrencies such as Bitcoin and Ether.
The study was quantitative, with fieldwork conducted by selecting participants from the digital research platform YouGov between the 5th and 24th of January 2021. Two sample groups were selected:
- A nationally representative sample of 2,568 individuals who were asked if they had heard of cryptocurrencies; and
- An additional cryptocurrency users sample of 994 individuals who currently or had previously used cryptocurrency.
Questions remained similar to the FCA’s previous quantitative survey from 2020 to allow for the possibility of comparison, however some additional questions involved purchasing cryptocurrencies and allowed for an examination of attitudes towards the specific type of asset known as ‘stablecoins’. Stablecoins are cryptocurrencies that have their price pegged to another asset, and typically this takes the form of government issued currencies.
The FCA’s main findings were grouped into several categories, as detailed below:
- Public awareness and understanding - The survey demonstrates a high level of general awareness amongst consumers regarding cryptocurrencies, with 78% of adults now having heard of cryptocurrencies. The study also shows that the most recognised cryptocurrencies are Bitcoin, Ether, Bitcoin cash and Bitcoin SV. Of those who recognised only one cryptocurrency, 70% only recognised Bitcoin. However, the study also highlights that the actual knowledge level of consumers is in decline as it is noted that “awareness does not necessarily equate to understanding”. Only 71% of those surveyed correctly selected the actual definition of a cryptocurrency from a list of options, a decline from the previous survey conducted in 2020. The FCA identifies this as a risk, with consumers potentially getting involved with cryptocurrencies without fully understanding the implications of doing so.
- Ownership - The FCA estimates that 2.3 million individuals (or 4.4% of the UK adult population) now own cryptocurrency, an increase from the 1.9 million estimated in 2020. The typical profile of a UK adult who holds cryptocurrency remains consistent with previous studies, primarily male over-35s with an ‘AB’ social grade (the upper to middle sections of the middle class social group). However, a slight difference exists for the more recent acquirers who have only held their cryptocurrencies for a year. These individuals have a broader age range (25 – 44), are more likely to borrow money to purchase their cryptocurrency, are happier to trade in unregulated markets and demonstrate higher instances of regret associated with their purchase. In terms of currencies, Bitcoin is the most common and is held by two thirds of crypto owners. Ether, Litecoin, XRP/Ripple and Bitcoin Cash were other popular examples.
- Motivation - In terms of motivation for owning cryptocurrency, two primary reasons were cited: <br/>38% noted it was “a gamble to make or lose money” – this was a decrease of 9% from the FCA’s previous 2020 survey, but it remains the most popular motivation; and<br/>30% indicated that cryptocurrencies were just a part of a wider investment portfolio, a 5% increase from the previous survey. This indicates that although some users do continue to see cryptocurrencies as a gamble, more individuals are keen to adopt them as an investment. Ultimately, these findings illustrate that cryptocurrencies could be becoming more mainstream. Survey results also demonstrated increased enthusiasm, with a rise from 41% of users in 2020 to 53% of users in 2021 agreeing that they would be more likely to buy more due to their positive experiences with cryptocurrency.
- Purchase and engagement - The FCA found that most users (78%) purchase cryptocurrencies via their own disposable income, however 14% resorted to borrowing. Two thirds of users indicated that they used an exchange to buy cryptocurrency. Interestingly, survey results noted a significant increase in respondents who reported checking the value of their crypto holdings every day. In 2020 only 13% did so, but in 2021 this rose to 29%.
The FCA has stated that it will reflect on the findings to inform their work on cryptocurrencies going forward. For a range of financial businesses from large institutions to smaller FinTechs, these findings highlight that consumers continue to show more willingness to engage with cryptocurrencies as awareness increases and ownership grows. Particularly promising is the fact that more users are starting to hold them as part of a wider investment portfolio - they are not merely seen as a gamble. The FCA has also seen an increase in cryptocurrency propositions make use of the FCA’s regulatory sandbox.
With the Kalifa Review highlighting that the UK is primed to become a global FinTech leader, there are plenty of opportunities for organisations wishing to become involved in cryptocurrencies going forward. However, it is also important to note that the FCA continues to be proactive in emphasising the risks for retail investors and the general public who may not sufficiently appreciate the volatility, novelty and lack of regulation in the cryptocurrencies space.
Co-authored by Laura Craig, Trainee Solicitor at CMS
 The FCA opted to use the term ‘cryptocurrency’ rather than cryptoassets more broadly, a s this is more widely used by the general public. ‘Exchange’ was also used to describe cryptocurrency trading platforms for the same reason.