Ownership, awareness and positive opinions of crypto assets have continued their upward trajectory over the past couple of years, according to research conducted by the UK Financial Conduct Authority (FCA).

Recounting its first survey of consumer perceptions of cryptocurrencies published in March 2019, the regulator said the market was small, with the vast majority either not engaged or not trusting of the asset class.

Only 3% of consumers had ever bought cryptocurrency, with a mean average spend of £200,” the FCA said on the findings of its first survey. “It also showed that awareness of cryptocurrency among the general population was low.”

The trend in favour of digital assets saw their support and uptake rise over the following 12 months and then again into 2021.

Last year, 73% of UK adults said they had heard of cryptocurrency. By March, that figure had risen to 78%, even as the survey’s sample size grew to represent 52 million UK adults versus 50 million for the previous year, the FCA said. 

The watchdog added crypto ownership in the UK has risen from 3.9% of all adults in 2020 to 4.4% in the most recent reading. Meanwhile, the median holding rose from £260 to £300.

In January, the FCA warned investors they should be prepared to “lose all their money” when investing in crypto – a narrative that will not be softened by the regulator’s finding that almost half of crypto users were unclear on the benefits of stablecoins.

Firmly asserting its suspicion of cryptocurrencies with the ban of crypto exchange-traded products (ETPs) being sold to retail investors last October, the regulator’s tough stance will continue being tested by encroachments such as the first UK listings of crypto ETPs on London’s Aquis Exchange.

Regarding the behaviours surrounding crypto investment, the FCA noted one positive step was 38% viewed cryptocurrency as ‘a gamble’ when considering reasons to invest, down from 47% a year earlier. 

Less encouragingly, 29% of crypto investors check their balances every day, versus 13% in 2020. The survey also found those who were persuaded to get involved by adverts were much more likely to regret their purchase. 

Areas of stasis include where crypto is being traded and who by. The regulator said most consumers still use exchanges for crypto transactions, while those involved tended to be men over the age of 35, in the A and B social grade categories.    

The FCA’s findings imply around half of crypto users plan to buy more, with a similar number saying they expect to make money ‘at some point’.  

Speaking on the findings, Laith Khalaf, financial analyst at AJ Bell, said: “The FCA’s latest research on crypto paints a broadly positive picture and shows most consumers are using crypto sensibly and moderately

However, Khalaf warned 14% of crypto buyers have borrowed money to finance their investments, which he said was a worrying thought. 

“The extreme volatility and uncertain long-term outlook for crypto means holdings can be wiped out, leaving borrowers with nothing but their debt as a memento,” Khalaf warned.  

“Around one in five crypto buyers said they were driven by FOMO, which is never a good motivation for financial decisions. A similar proportion said they were buying crypto instead of shares or other investments, which suggests some consumers are leapfrogging traditional assets which can help to build long-term wealth.” 

Myron Jobson, personal finance campaigner at Interactive Investor, added: “Cryptoassets are and remain high-risk options because of how much and how quickly its value can change unexpectedly. 

“But, whatever your approach to risk, cryptocurrency should only be a tiny proportion of a portfolio and the merits of a diversified investment portfolio and avoiding trying to market-time should not be forgotten.”