Five million Brits now own risky crypto: City watchdog sounds alarm

Nearly 5 million people in Britain own cryptocurrency despite warnings they could lose all their money.

When it announced its latest crackdown on what critics have called a “Wild West” industry, the Financial Conduct Authority (FCA) revealed last year that 9 percent of UK adults invested in digital tokens like bitcoin.

That amounts to 4.97 million men and women, more than double the 2.3 million who owned crypto assets in 2021.

With fears mounting that more people are taking unnecessary risks, the FCA has announced measures to make the industry safer.

It comes amid a major crackdown in the US, where regulators are targeting two of the world’s largest crypto exchanges: Binance and Coinbase.

The Securities and Exchange Commission this week filed lawsuits against both, accusing Binance and its boss of “an elaborate web of deception” and “calculated evasion” of US laws.

Today, the FCA reiterates its warning that investors should be “prepared to lose all their money.”

The new measures include a mandatory ‘cooling off period’. Due to changes in advertising coming in from Oct. 8, companies will have to wait 24 hours before new customers can purchase cryptoassets — in the hopes of reducing the number of impulsive decisions.

It also plans to ban “refer a friend” bonuses that are used to lure newbies, with the aim of diverting consumers, who may not understand that crypto is not backed by a central bank, from making a hasty decision.

The FCA has been on a mission to stamp out crypto-get-rich-quick scams, as well as celebrity endorsement of risky and unregulated products on social media.

In a report today, the FCA found that more than a third of consumers regret purchasing cryptoassets, while 46 percent of people said their investments are now worth less than the initial purchase value.

Sheldon Mills, executive director at the FCA, said: ‘Our rules give people the time and appropriate risk warnings to make an informed choice.

Consumers should still be aware that crypto remains largely unregulated and risky. Those who invest must be prepared to lose all their money.’

Laith Khalaf, head of investment analysis at AJ Bell, said: “The message to crypto companies is that if they want to play in the mass market, they have to play by the rules.”

Rio Stedford, financial planning expert at Quilter, said: “While some have made money from crypto, and there is nothing wrong with that, those who invest are taking a real gamble because they risk losing everything.

“It is particularly concerning when people are inexperienced investors and can be vulnerable to the social media promotions that can be highly misleading, and it is right that those who promote crypto will soon be held accountable.

These rules follow a major crackdown in the US and we could see even more changes in an effort to protect consumers.”

But critics say the measures do not go far enough.

Dame Angela Eagle, a Labor MP who sits on the Treasury committee, said that while the measures were ‘very welcome’, she wasn’t sure 24 hours was a long enough cooling-off period.

The FCA’s crackdown comes as the industry reels from increased scrutiny in the US. Walid Koudmani, at broker XTB, said US regulators hoped to “lead by example” with lawsuits against Binance and Coinbase. “Whatever the US does, British regulators are likely to follow suit,” he said.