Home News Competition drives young traders’ crypto investments, says UK watchdog

Competition drives young traders’ crypto investments, says UK watchdog

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According to new research issued by the UK Financial Conduct Authority (FCA), most young investors in the UK are entering the crypto market as a result of the buzz on social media and in the news, but many are unaware that the sector is unregulated.

According to the poll, the majority of investors under the age of 40 believe that crypto markets are controlled (69%). Competition with friends and family motivates more than three-quarters (76%) of young investors. Who engage in hazardous assets such as cryptocurrency, forex, or crowdfunding.

According to The Independent, the financial watchdog polled 1,000 British investors aged 18 to 40 who have invested in high-risk investment products as part of its five-year InvestSmart campaign. The program, which has a budget of $15 million (£11 million), intends to increase awareness of high-risk investments among young people. During the COVID-19 pandemic, the FCA believes that over a million British investors purchased high-risk assets.

More than half of the participants in the study said that social media, other people, and news items are important factors in deciding whether or not to buy a certain product. On the other hand, the majority choose steady earnings over price fluctuations. However, only 21% plan to keep their most recent investment for more than a year.

More individuals are pursuing large returns at increased risks

Sarah Pritchard, FCA executive director of markets, commented on the findings. She stated that more individuals are pursuing large returns at increased risks. “We want to offer customers more confidence in their ability to invest. As well, assist them in doing so securely while knowing the amount of risk involved,” she added.

Jon Cunliffe’s comments on crypto rules prompted the FCA poll. Cunliffe, the Bank of England’s deputy governor for financial stability, encouraged authorities to act quickly on crypto.

Price volatility in crypto assets, according to Cunliffe, “may generate margin calls on crypto positions. Requiring leveraged investors to find funds to satisfy them. Which lead to the selling of other assets and producing spillovers to other markets”.

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