A total of 45% of young adults aged 18-29 say their first ever investment was in cryptocurrency, according to interactive investor research.
The government plans to legislate to address misleading cryptoasset promotions, adverts will be brought into line with other financial advertising, ensuring they are fair and clear.
Commenting, Myron Jobson, Personal Finance Campaigner, interactive investor, says: “From a consumer perspective, we’ve been crying out for greater measures to prevent the scourge of misleading and downright harmful advertising of cryptocurrency.
“Many cryptocurrency adverts I’ve seen tap into the FOMO (fear of missing out) culture and effectively gaslights would-be investors into thinking cryptos are a sure bet, without flagging the high-risk and highly volatile nature of the asset.
“The infamous poster plastered over London’s public transport claiming ‘If you’re seeing Bitcoin on the underground, it’s time to buy’ is a case in point. Cryptocurrency is highly complex, volatile and, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
“Our research* found that 45% of young adults aged between 18 and 29 are getting their first taste of investing through high-risk cryptocurrency – and an alarming number are funding this through a cocktail of credit cards, student loans, and other loans. The influence of cryptocurrency advertising cannot be understated here. They have become increasingly difficult to miss, often cropping up on social media platforms and even on public transport.
“The concern is first-time investors who experienced a baptism of fire by losing money on crypto bets could be put off investing for life – which could scupper their financial goals.
“The regulatory regime around the advertising of cryptocurrencies is in desperate need of modernising and there is not time to delay. The worry is at a time where many have experienced a financial squeeze resulting from the pandemic and the cost of living crunch, consumers may be influenced by misleading adverts to invest in these high-risk products that might not right for them.”