The Financial Conduct Authority (FCA), Britain’s financial watchdog, on Thursday released the results of two studies looking at awareness of and investment in crypto assets in the UK. They found that one of the biggest reasons for buying crypto was a hope of “getting rich quick.”
The first survey, which involved in-depth interviews with 31 crypto investors, found hopes of fast wealth was the number one reason for investing.
“Particularly for the younger people in the sample, this seemed to be related to a more general aversion to traditional forms of employment and an attraction to lifestyles of leisure and making ‘easy money’ with little effort,” the report said.
The second report, based on a survey of over 2,000 people across the UK, found that “Expecting to make money quickly” was the third most popular reason for buying crypto assets. 18% of respondents who had invested in crypto cited this as their reason for doing so.
The interviews with 31 crypto investors in the first survey found that a “fear of missing out,” or “FOMO,” was another major reason for buying crypto.
“Many had read articles or heard the stories of consumers who had bought Bitcoin in or before 2017 and made a significant amount of money,” the report said. “Already worried that they might have left it too late, they didn’t want to miss out on the chance to be ‘in’ on any cryptoassets that might increase in value in the future.”
The second survey of 2,000 Brits found that “FOMO” was a smaller factor, with just 4% saying it was their main reason for investing.
Other reasons given for buying crypto include a gamble and as part of, or instead of, a traditional financial portfolio.
The survey of 2,000 Brits, which was conducted by market research firm Kantar, suggests crypto remains a relatively niche investment. 70% of respondents either didn’t know what crypto was or couldn’t define it. Kantar and the FCA estimate that just 3% of Brits have bought crypto assets.
The most popular cryptocurrency to buy is bitcoin, with just over 50% of buyers opting for crypto’s oldest coin. Ether is the second most popular, with 34% of crypto investors buying it.
“This research gives us evidence we haven’t had before about how consumers interact with cryptoassets. This will help us ensure we are acting on evidence as we seek to protect consumers and market integrity,” Christopher Woolard, the FCA’s executive director of strategy and competition, said in a statement.
“The results suggest that although cryptoassets may not be well understood by many consumers, the vast majority don’t buy or use them currently.”
The two FCA-commissioned studies are part of the UK Cryptoassets Taskforce, which was set up in 2018 and involves the FCA, the Bank of England, and the Treasury. The Taskforce seeks to understand the UK’s crypto landscape so it can be appropriately regulated.
“Whilst the research suggests some harm to individual cryptoasset users, it does not suggest a large impact on wider society. Nevertheless, cryptoassets are complex, volatile products — consumers investing in them should be prepared to lose all of their money,” Woolard said.
Cryptocurrencies and assets exploded in popularity in 2017 as the value of bitcoin rose over 1,000% to around $20,000 by the end of the year. However, cryptos crashed in 2018 and bitcoin today trades at around $3,900. The FCA has previously warned UK consumers that cryptos are “highly volatile and risky.”