An estimated 2.3 million UK adults now maintain cryptoassets reminiscent of Bitcoin – regardless of warnings of the dangers concerned – in keeping with the Metropolis watchdog.
The determine from the Monetary Conduct Authority (FCA) represents an increase of 400,000 since final yr.
It’s primarily based on a survey of greater than 2,000 individuals taken in January which additionally recommended that the extent of total understanding of cryptocurrencies was declining.
Most customers tended to be males aged over 35 within the “AB” social grade overlaying managers and professionals, the FCA mentioned.
They usually maintain round £300 – up from £260 beforehand – whereas 14% mentioned that they had borrowed to take a position and 18% mentioned they did so resulting from worry of lacking out.
The examine additionally discovered fewer crypto customers regard the tokens as a chance – 38%, down from 47% final yr – whereas rising numbers see them as both a complement or an alternative choice to mainstream investing.
It additionally recommended enthusiasm for the belongings rising, with greater than half of customers reporting a optimistic expertise to this point and fewer regretting having purchased cryptoassets.
The FCA analysis got here at a time of heightened curiosity within the sector and an increase within the value, in addition to nicely as extra widespread involvement of monetary providers companies and institutional funding available in the market.
The watchdog mentioned that it had issued plenty of warnings in regards to the dangers concerned.
Sheldon Mills, the FCA’s government director for customers and competitors, mentioned: “The market has continued to develop, and a few traders have benefitted as costs have risen.
“Nonetheless it will be significant for patrons to grasp that as a result of these merchandise are largely unregulated that if one thing goes improper they’re unlikely to have entry to the FSCS [Financial Services Compensation Scheme] or the Monetary Ombudsman Service.
“If customers spend money on most of these merchandise, they need to be ready to lose all their cash.”
The most well-liked type of asset was Bitcoin, held by 66% of customers, adopted by Ethereum at 35%, in keeping with the survey.
Bitcoin hit a report excessive of $65,000 (£47,000) in April however has since been hit by fears of a crackdown on the sector in China, in addition to Tesla boss Elon Musk’s reversal of a choice to permit the electrical automotive maker to simply accept funds within the cryptocurrency.
That prompted a pointy fall to about $30,000 (£21,180), although it has since partially recovered.
Financial institution of England governor Andrew Bailey has beforehand expressed issues about cryptocurrencies, additionally saying individuals ought to solely spend money on them if they’re ready to lose all their cash.
Final week, El Salvador became the primary nation to approve of the usage of Bitcoin as authorized tender.
Laith Khalaf, monetary analyst at AJ Bell, mentioned the FCA analysis “paints a broadly optimistic image and exhibits most customers are utilizing crypto sensibly and reasonably”.
“Nonetheless, there’s a darkish underbelly lurking within the figures, which suggests there may be nonetheless potential for widespread client hurt,” Mr Khalaf added.
“The truth that 14% of crypto patrons have borrowed to take a position is just terrifying.
“The acute volatility and unsure long-term outlook for crypto means holdings may be worn out, leaving debtors with nothing however their debt as a memento.”