The Financial Conduct Authority is spending £11m on a digital marketing campaign to warn investors over the risks of putting their money into cryptocurrency.
Speaking as the regulator launched its new business plan on 15 July, chief executive Nikhil Rathi said that the FCA remained concerned over how many investors — particularly those falling into younger and ethnic minority demographics — were ploughing savings into asset classes that could potentially leave them penniless.
“We’ve seen an explosion of young people speculating on cryptos and other high-risk investments,” Rathi said. “As with the GameStop episode, more people see investing as entertainment… egged on by anonymous and unaccountable social media influencers.”
Rathi noted FCA research showing that some 2.3 million Brits were now invested in cryptocurrencies, and “controls” were needed when technology was being used to promote such risky options.
“That’s why we are creating an £11m digital marketing campaign to warn them of the risks,” he said. “As we have repeatedly made clear, investors in crypto assets should be prepared to lose all their money.”
Previous FCA warnings have largely gone unheeded — only 10% of people who were aware of cryptocurrencies were also aware that the FCA had issued consumer warnings on its website when the watchdog conducted a survey.
Rathi gave no further detail on how the regulator would spend its £11m budget. Recent high-profile campaigns on the PPI deadline and pension fraud were fronted by actor Arnold Schwarzenegger and football pundit Clive Tyldesley respectively.
In a change of its historic approach, however, the FCA said that it would no longer be restricted to what it calls its regulatory “perimeter” — what its official remit includes — when it comes to its supervision of financial markets.
While the FCA was able to ban the sale of crypto-derivatives to retail consumers in October, it does not formally regulate crypto tokens themselves, but this change of approach could spell a wider brief for the regulator.
“Even where we don’t have powers, we won’t turn a blind eye,” Rathi said.
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