In a speech exploring the critical issues in financial regulation, Nikhil Rathi, CEO of the Financial Conduct Authority, spoke of the need for further clarity around cryptocurrency.
“The explosive growth of cryptocurrencies has left the city watchdog picking up the pieces. While cryptocurrency has come a long way since its humble beginnings in the recondite niches of the internet, the crypto market remains a Wild West – blighted by scams, fraud and irresponsible marketing. There is a desperate need for change.
“The rise of crypto has captured the minds of young investors in particular. 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 worry is that 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. But this is by no means an issue only applies to the young.
“No one short of a functioning crystal ball can say for sure what the future holds for cryptocurrencies, but we do know that traditional assets have been serving investors for decades, they are far easier to understand, and they spread your risk. Whatever your approach to risk, crypto currency should only be a tiny proportion of a well-diversified portfolio.”