FCA takes to YouTube and TikTok to warn youth about cryptocurrency investing

Regulator finds that 69% of under-40s believe cryptocurrencies are regulated

FCA logo on a smartphone                                 
FCA launches responsible investing campaign for young investors – Photo: Shutterstock
                                

The UK’s Financial Conduct Authority (FCA) has taken to social media in an effort to warn young people about the potential dangers and pitfalls associated with investing in cryptocurrencies. 

As part of its new InvestSmart campaign, which seeks to help consumers make informed investment decisions that fit their risk profile and financial circumstances, Britain’s financial regulator has set up accounts on both TikTok and YouTube. 

In advance of the campaign launch, the FCA polled a group of 18- to 40-year olds who have invested in high-risk assets and discovered that 76% admitted that their decision-making was driven by a sense of competition with family and friends. 

InvestSmart survey results

Around 58% of respondents said that social media encouragement and online information had convinced them to invest their savings into a specific asset, whie 43% admitted that their investment decisions were primarily driven by a desire to score better returns than their peers. 

The survey also found that 69% of under-40s incorrectly believed that cryptocurrencies are regulated. 

Speaking to the I, the FCA’s executive director, markets, Sarah Pritchard, maintained that the organisation wanted to empower young investors rather than to inhibit them.

She added: “We don’t believe that the actions of many of these new investors reflect what they describe as their tolerance to risk. 

“Sixty per cent of those invested in high-risk assets said they want stable returns. We don’t want to limit choice, we are just asking investors to pause and consider. Are you prepared to lose all your money? If the answer is yes, then fine.”

The FCA’s attitude to cryptocurrency

Although generally receptive to the potential innovation offered by the underlying blockchain technology, the financial watchdog’s attitude to the burgeoning cryptocurrency sector could be described as ‘consistently wary’. 

At the start of the year, the FCA issued a statement saying that cryptocurrency investors “should be prepared to lose all their money”. At the same time, it has stepped up efforts to improve the regulatory standards with which crypto-related companies are required to comply. 

In August, the FCA banned Binance from carrying out any regulated activity in the UK. The regulator stated that it could not effectively supervise the world’s largest cryptocurrency exchange as it “refused” to provide basic details about its operations. 

Bank of England concerns

The FCA’s concerns about the possible issues associated with cryptocurrency investing appear to be shared by the Bank of England. 

Last week, Sir Jon Cunliffe, the UK central bank’s deputy governor, financial stability, argued that most cryptocurrencies “have no intrinsic value and are of value to major price corrections”. 

Cunliffe warned that the rapid expansion of the cryptocurrency sector could trigger a global financial crisis akin to that caused in 2008 by the US subprime mortgage market. 

By 13:00 (BST), Bitcoin – the world’s first and largest cryptocurrency by volume – traded at $63,806, up 115% over the past three months. 

Further reading: Alibaba stock jumps as Jack Ma visits Europe

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