FCA to Spend $15M Warning of Crypto Risks
Key Takeaways
The FCA is investing $15 million into warning young people about the risks of cryptocurrency investing.
The financial regulator’s CEO said that young crypto holders are prone to behaving “less rationally and more emotionally.”
The FCA has issued several warnings about cryptocurrencies in the past, recently targeting Binance.
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The U.K.’s financial regulator said that young crypto holders are likely to behave “less rationally and more emotionally.”
FCA to Invest in Cautioning Against Crypto
The Financial Conduct Authority (FCA), the U.K. body responsible for regulating the country’s financial services, is launching a marketing campaign to warn against the risks of crypto investing.
CEO Nikhil Rathi announced the move in a speech Thursday. The FCA will spend £11 million (around $15 million) on the campaign. During the announcement, Rathi said that almost 2.5 million U.K. residents hold crypto.
He went on to make several assessments of crypto’s core user base, explaining that the campaign would target a younger demographic. He explained that many crypto investors are likely to be younger people who are prone to acting “less rationally and more emotionally,” adding that they are often drawn in by “anonymous and unaccountable social media influencers.”
Meme stocks and cryptocurrencies have exploded in popularity among Gen Z in recent months. As a result of the boom, many young influencers have taken to social media to promote cryptocurrencies like Safemoon. In response to the growing interest, TikTok banned sponsored crypto posts last week. TikTok is popular among younger generations.
Rathi said that the FCA does not typically engage with the 18 to 30-year-olds, but remarked that people in that age bracket are “more likely to be drawn in by social media.” He then discussed the GameStop frenzy that hit the stock market in January, drawing comparisons to the crypto market.
The campaign announcement isn’t the only sign of the FCA taking a stand against the crypto space. It’s one of many regulators to recently issue a warning about Binance; the exchange has been banned from offering derivatives in the U.K. It also warned that crypto investors “could lose all of their money.”
Many U.K. crypto firms are currently awaiting regulatory approval from the FCA to continue operating in the country. They were required to register before 10 Jan. 2021, with a decision on each firm’s regulatory status due on July 9. That deadline’s now been pushed back to March 2022.
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