FCA Survey Reveals Younger Investors are Oblivious to Risks Associated With Crypto and Forex Investments

A research conducted by a consulting firm commissioned by the UK Financial Conduct Authority (FCA), showed that younger consumers in the country were involved in high risk investments such as cryptocurrencies.  

Young Consumers Invest in Crypto for the Thrills

According to a press release published by the UK regulator on Tuesday (Mar. 23, 2021), the investors who featured younger, diverse groups invested in crypto and foreign exchange (forex) more for the thrill and status. The FCA’s findings also revealed that consumers investing in high risk products did so because of the challenge and competition, rather than having functional reasons for investng.

The research was conducted by BritainThinks, an international consulting firm, between August 18, 2020 and January 20, 2021. About 517 “self-directed investors” – individuals who made independent investment decisions without seeking professonal financial advice – participated in the survey.

With the research, it was discovered that the new group of investors were different from the conventuinal investors. They were most likely female from a Black, Asian, and Minority Ethnic (BAME) background under the age of 40. These group of self-investors get access to investment news and tips through YouTube and other social media. 

Also, the research revealed that these investors, while they exhibit confidence and claim knowledge, lacked awareness or believe in the risk associated with investing.  Furthermore, four out of 10 invested money without thinking that “losing some money” was an investment risk.

In addition, 78 percent of such investors relied on their instincts to know when to buy and sell an asset. Another 78 percent also agreed that “there are certain investment types, sectors or companies I consider a ‘safe bet’”

While these young and diverse self-investors seemed to carry out investments with instinct rather than critical thinking, they did not have the resilience to withstand financial loss. Based on the findings, 59 percent of those surveyed with under three years’ experience said that a significant investment loss would greatly affect their lifestyle. 

FCA With a Mission to Protect Investors

Meanwhile, the FCA noted that the research gave insight to how such category of consumers carried out investment and how the regulatory body could advise these investors on the risks of engaging in such high-risk investments. 

Commenting on the findings was Sheldon Mills, FCA’s executive director of consumer and and competition, who said:

“We are worried that some investors are being tempted – often through online adverts or high-pressure sales tactics – into buying higher-risk products that are very unlikely to be suitable for them…Investors need to be mindful of their overall risk appetite, diversifying their investments and only investing money they can afford to lose in high risk products.”

Alongside today’s press release, the FCA also launched a digital disruption campaign to safeguard consumers against investment harm. The targeted campaign comes with questions which investors need to ask before making any investment decisions. 

The UK regulator in the past has warned citizens on different about the risk associated with cryptocurrecy investment. Earlier in January, the FCA officially banned retail crypto derivatives trading to protect consumers. 

Related posts:

Like BTCMANAGER? Send us a tip!

Our Bitcoin Address: 3AbQrAyRsdM5NX5BQh8qWYePEpGjCYLCy4


Tagged : / / / / / /

FCA Issues Fresh Crypto Warning to UK Investors

Fresh from enacting its ban on the sale of crypto derivatives to retail traders, the U.K. Financial Conduct Authority (FCA) has issued new warnings about crypto investments to consumers. Meanwhile, commercial banks in the country are adopting a more anti-cryptocurrency stance refusing to accept deposits from virtual currency sources even as the government appears set to create a regulatory framework for digital assets and stablecoins in the wake of its post-Brexit fintech revamp.

FCA Warns U.K. Consumers Against Crypto HYIPs

In a communique issued on Monday (Jan. 11, 2021), the FCA advised consumers to be wary of firms advertising crypto high yield investment programs (HYIPs). According to the U.K. regulatory watchdog, investments in these assets comes at the risk of significant losses.

An excerpt from the FCA’s notice reads:

“As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.

The U.K. financial regulator also urged investors to be cautious of firms that contact them “out of the blue” promoting crypto investments. According to the press release, consumers should always check the FCA website to see if such companies are included in its blacklist of known con artists.

Back in Feb. 2020, the FCA introduced new rules for crypto businesses, expanding its regulatory remit over the U.K.’s cryptocurrency scene. These rules which came into force on Jan. 10, 2021, mandates that all crypto firms in the U.K. must be registered with the regulator.

In Dec. 2020, the FCA extended the consideration period for crypto firms that have already applied for an operating license. At the time, the move was necessary to provide additional time for the regulator to process the backlog of pending submissions.

Monday’s warning is coming days after the FCA’s ban on retail crypto derivatives trading came into the effect.

Conflicting U.K. Crypto Policies

On the one hand, the government says it is looking at the creation of clear-cut regulations for the cryptos and stablecoins. As previously reported by BTCManager, Her Majesty’s (HM) Treasury has called for public opinion on its planned cryptocurrency regulatory framework that includes exemptions for Bitcoin and utility assets from stringent legal compliance standards.

However, U.K. banks are reportedly prohibiting customers from depositing profits from crypto trading. According to reports, some banks are wary of accepting transfers from crypto exchanges over money-laundering fears.

With anti-money laundering (AML) protocols being part of the Treasury’s proposed crypto rules, this situation might be resolved once the planned regulations become law.

Like BTCMANAGER? Send us a tip!

Our Bitcoin Address: 3AbQrAyRsdM5NX5BQh8qWYePEpGjCYLCy4


Tagged : / / / /

UK Crypto Businesses Get Reprieve as FCA Extends Consideration Period Until mid-2021

UK Great Britain Big Ben Crypto Bitcoin

UK Great Britain Big Ben Crypto BitcoinUK financial regulators will allow crypto firms with pending registration applications to continue to operate until the middle of 2021. The agency plans to use the extension to clear the applicant backlog as its operations have been hamstrung by the ongoing coronavirus pandemic. FCA Announces Temporary Registration Regime for Crypto Companies The UK Financial Conduct

Read MoreRead More. The post by Anthonia Isichei appeared first on BTCManager, Bitcoin, Blockchain & Cryptocurrency News


Tagged : / / / / / /
Bitcoin (BTC) $ 26,899.21 0.45%
Ethereum (ETH) $ 1,667.16 0.79%
Litecoin (LTC) $ 66.21 1.61%
Bitcoin Cash (BCH) $ 234.32 1.76%