Young people in the UK are more interested in crypto than stocks

The head of the UK’s Financial Conduct Authority has voiced concern about the number of young adults turning to cryptocurrency for their first investments. 

Nikhil Rathi, chief executive of the FCA, cautioned members of Parliament that millions of under-35s are choosing assets like Bitcoin instead of more traditional options such as equities or bonds. 

He said that investing in digital coins involves “a very high risk that you could lose all your money.” 

In explaining why this matters, Rathi shared that the number of Britons owning shares directly is much lower than in places like the United States or Sweden. He told MPs on Tuesday that 38 percent of US citizens hold equities, while in Sweden, the figure is more than 20 percent. 

By contrast, far fewer people in the UK own shares, especially younger citizens, who seem drawn to alternative assets like bitcoin. Rathi added, “We have also evolved a particular approach to risk and compensation in the UK, which perhaps isn’t matched in other parts of the world.” 

UK’s FCA wants young Britains to consider ‘mainstream investments’

The FCA’s new five-year plan, presented on Tuesday, focuses on four key objectives, one of which is helping consumers make better financial decisions. The authority will track how many people with more than £10,000 of investible assets choose to place their money in what it calls “mainstream investments” by 2030. 

Rathi told the committee that one of his concerns is “the sheer number of under 35-year-olds for whom the financial product that they invest in first is crypto — several million in the UK.”

Currently, the UK’s crypto market is largely unregulated. Companies handling crypto transactions only need to register with the FCA to show they follow anti-money laundering rules. 

The government, however, intends to introduce legislation that would create a specific regulatory framework for crypto businesses. Last year, the FCA estimated that about 12 percent of UK adults owned crypto assets. That equates to roughly 7 million people, with men under 35 most likely to borrow money to fund their coin purchases, according to a YouGov survey of nearly 2,200 adults.

Rathi linked the country’s low level of share ownership to “a mix of tax, education, regulation and broader culture in our country.” He emphasized that the question of risk and compensation is not the FCA’s responsibility alone. “We have also evolved a particular approach to risk and compensation in the UK, which perhaps isn’t matched in other parts of the world,” he said.

Under the new plan, the FCA pledges to “deepen trust, rebalance risk, support growth and improve lives.” While the regulator has been criticized in the past for holding back innovation and investment, several industry figures gave the new strategy a careful endorsement. 

The authority will use AI to act ‘more efficiently and effectively’

A central part of the new approach is making more use of technology, including artificial intelligence, to help the FCA act “more efficiently and effectively.” 

The agency also aims to crack down further on financial crime, stressing that it will focus “on those who seek to use the fact they are regulated to do harm.” 

Also on Tuesday, the authority announced plans to simplify its extensive set of regulations by removing over 100 pages devoted to consumer finance, investments, and mortgage lending. 

This change was set in motion after Chancellor Rachel Reeves revealed a “radical action plan to cut red tape,” intending to reduce regulatory costs for businesses by 25 percent. The FCA’s rule book is currently longer than 10,000 pages, and the goal is to make it less burdensome for legitimate operators while keeping protections in place for the public.

James Daley, who heads the research group Fairer Finance, expressed worry about the direction of these proposals. “The general direction of travel is worrying,” he said. He believes the regulator is under political pressure to reduce the regulation burden but argues that some of these changes “would be a step backwards.” 

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