Reference Case Number: FOI8437
Freedom of Information: Right to know request:
The FCA determined the retail investor had little understanding of crypto assets and how they want to invest their money. I would like information on how the FCA determined this conclusion and detail on the survey that was carried out. I would like the report that was used to determine this conclusion based on any public survey that was carried out.
FCA response:
We have taken your request to refer to the FCA’s statement prohibiting the sale to retail clients of derivatives and exchange traded notes (ETNs) that reference certain types of cryptoassets. Here we stated that retail consumers had inadequate understanding of cryptoassets and that there is a lack of clear information for investment products referencing them.
The FCA reached this conclusion based on qualitative research conducted in 2019 (https://www.fca.org.uk/publication/research/cryptoassets-ownership-attitudes-uk-consumer-survey-research-report.pdf) and analysis of consumer losses in the market (details of which can be found in CP19/22).
Page 5 of the qualitative report shows that 63% of those surveyed from a national representation of the UK adult population, had either never heard of cryptoassets, did not know what it was or described cryptoassets incorrectly. Extrapolating these figures, and taking into consideration the complex and high risk nature of cryptoassets, we concluded that many consumers did not fully understand cryptoassets.
We followed up on this research in 2020 (https://www.fca.org.uk/publication/research/research-note-cryptoasset-consumer-research-2020.pdf) and 2021. Our latest wave found that only 58% of crypto users agreed (and only a third strongly agreed) with the statement ‘I believe I have a good understanding of how cryptocurrencies and the underlying technology works’, down 4 percentage points from the research in 2020. Details of how the research was conducted can be found in the research note (https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021). We have consistently warned consumers that they are unlikely to be subject to regulatory protections if something goes wrong and that if they choose to invest in these types of products, they should be prepared to lose all their money.