7 Million People Own Crypto in the UK, According to Financial Watchdog

The UK’s financial watchdog has sounded the alarm on a growing trend among young people, with millions under the age of 35 diving headfirst into the volatile world of cryptocurrencies like Bitcoin.

Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), recently told MPs that this shift away from traditional investments such as equities and bonds is a pressing concern. According to the Financial Times, Rathi highlighted how several million young Brits are choosing crypto as their entry point into investing, despite the risk that they could lose their investments. This revelation comes as part of the FCA’s broader push to steer consumers toward safer, more sustainable financial choices through its newly unveiled five-year strategy.

Rathi pointed out a striking contrast between the UK and other nations. In the US, 38% of people own shares directly, while in Sweden, the figure exceeds 20%. In Britain, however, direct share ownership lags significantly behind. The FCA sees this as a missed opportunity for long-term wealth building, with Rathi emphasizing that guiding consumers toward equity and bond markets is a cornerstone of the regulator’s plan.

One measurable goal is to increase the proportion of people with over $10,000 in investible assets who hold mainstream investments by 2030. The hope is to shift the focus from high-risk crypto gambles to options that promise steadier returns over time.

A New Strategy for a Changing Landscape

The FCA’s five-year vision, unveiled this week, aims to address these challenges while fostering trust and growth in the financial sector. Beyond encouraging better investment habits, the regulator pledged to tackle financial crime, harness technology like artificial intelligence for efficiency, and simplify its sprawling rulebook.

With over 10,000 pages of regulations currently in place, the FCA plans to retire more than 100 pages covering consumer finance, investments, and mortgages. This move aligns with Chancellor Rachel Reeves’ recent commitment to slash red tape and reduce regulatory costs for businesses by a quarter. The watchdog also intends to review prescriptive rules, such as those governing asset manager fee reporting and credit advertising disclosures, to offer firms greater flexibility.

The crypto market, while booming, remains largely unregulated in the UK beyond basic anti-money laundering requirements. Last year, the FCA estimated that 12% of UK adults, roughly 7 million people, own crypto assets, with young men under 35 most likely to borrow money to fuel their investments.

The government has signaled plans for a more comprehensive regulatory framework, but for now, the FCA is focused on educating consumers about the risks. Rathi noted that Britain’s cautious approach to risk and compensation, shaped by a blend of tax policies, education gaps, and cultural attitudes, sets it apart from other global markets.

The City of London Corporation and the Association of British Insurers have cautiously welcomed the FCA’s direction. Chris Hayward, policy chair at the City, praised the regulator for sparking a debate on balancing risk and growth, while Hannah Gurga, director-general of the insurers’ group, called the strategy a positive step forward. Yet, not everyone is convinced. Consumer advocates like James Daley of Fairer Finance worry that pruning regulations could weaken vital protections, accusing the FCA of bowing to pressure to lighten the load on businesses at the expense of ordinary people.