U.K. Officials Nervous as ‘Millions’ of Young People Invest in Crypto

British regulators have said they’re worried about the growing number of young people investing in cryptocurrencies — but not everyone shares these concerns.

Officials from the Financial Conduct Authority recently faced a grilling from the Treasury Select Committee, a group of politicians who examine economic policies in greater detail.

The FCA says it wants to see more Britons with large amounts of spare cash start to invest in the stock market, which should allow their savings to grow over time.

According to FCA chief executive Nikhil Rathi, 38% of U.S. households directly own shares, falling to 20% in Sweden. But across Britain, he warned this figure is “significantly lower.”

“One thing I also think is not great is the sheer number of under 35s for whom the financial product that they invest in first is crypto — several million in the UK — rather than equities or debt or other types of products. That is something that we want to engage in as well, because we know there is very high risk, and you could potentially lose all your money.”

The latest FCA estimates from August 2024 suggest that about 12% of British adults, equivalent to seven million people, now have exposure to crypto.

It is worth noting that the regulator has faced a pushback on this viewpoint from some lawmakers — namely John Glen, who sits on the Treasury Select Committee. During the last government, he played a role in efforts to transform the U.K. into a “global cryptoasset hub,” which ultimately fell by the wayside when the Conservatives lost last year’s election.

In a recent article for City AM, Glen argued that pro-crypto policies should remain a priority — especially with Donald Trump in the White House, and the EU offering greater regulatory clarity through MiCA. Noting that the FCA has a poor record of registering digital asset firms, he wrote:

“Crypto leaders broadly feel that the FCA has adopted an excessively cautious stance toward the industry, even creating a combative environment … If the U.K. continues this path, it risks forfeiting its leadership in financial innovation and losing a vital opportunity to harness crypto’s transformative economic and societal benefits.”

Glen wrote that the FCA’s mission to tackle financial crime and consumer harm shouldn’t come at the detriment of legitimate businesses trying to offer crypto products to consumers.

Nikhil Rathi defended the Financial Conduct Authority’s stance during the committee hearing — and mentioned that article in particular. He stressed that the regulator doesn’t want to stop the U.K. from being an attractive place to operate a business, and claimed 86% of crypto firms had their applications refused because they failed to meet strict anti-money laundering standards. He added:

“We held back approvals of some of the largest firms in the world, which did get approvals and licenses to operate in other very large jurisdictions. We got a lot of flak for that, including from some of your former colleagues, but we had a job to do.”

Offering an insight into how the FCA views this space, chairman Ashley Alder broke the industry down into three categories: stablecoins, “unbacked” cryptocurrencies like Bitcoin, and blockchain technology.

The regulator also faced scrutiny regarding whether consumers understand what FCA authorization actually entails — and whether they may misinterpret this status as an endorsement for a financial firm.

All of this comes as the FCA prepares to tighten U.K. crypto regulations even further. While Coinbase is among those that has been given the green light to operate, because it complies with AML rules, the exchange may soon be judged against a plethora of other standards too.

Britain had been positioned as one of the brightest destinations for crypto businesses during the Biden era, primarily because of the Securities and Exchange Commission’s approach during Gary Gensler’s reign. But the arrival of the Trump administration, which has already greenlit the creation of a strategic Bitcoin reserve, has thrown all of this into doubt.

The institutional crypto custodian Copper was among the first to seize upon this shifting political climate. Back in December, it announced that it was no longer seeking authorization from U.K. regulators — and would instead focus on operations overseas.

While Prime Minister Sir Keir Starmer has been vocal in his enthusiasm for artificial intelligence, that hasn’t really extended to crypto.

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