U.K. Financial Conduct Authority warns of young unaware crypto investors
According to the United Kingdom Financial Conduct Authority, a significant percentage of investors aged 40 or less do not have any understanding of the unregulated nature of cryptocurrency. People do not know that they do not have any protection in case of criminal activities. For example, there is no legal protection against cybercrimes taking place through cryptocurrencies. If a cryptocurrency exchange’s servers are hacked, and significant amounts of money are stolen, the government cannot do anything, nor is it bound to. Results from a survey conducted by the FCA revealed that almost 70% of young investors believe that cryptocurrency is regulated in the United Kingdom.
The FCA has identified a few reasons why young investors invest significant amounts of money without a proper understanding of digital assets. According to them, staying ahead in competition with friends and family is one of the primary motives behind investing in crypto.
More than half of the surveyed group said that they got the motivation to invest from social media and television advertisements. Veteran crypto investors know that the right way to invest in cryptocurrency is through long-term plans. However, almost 80% of the surveyed population did not have any plan of holding their assets for more than a year. According to Sarah Pritchard of FCA, millennials are obsessively chasing high returns without understanding the risks involved. The goal of FCA is now to educate these young investors about the risk-reward ratio and more. If young investors continue to invest mindlessly, it will pose a threat of large-scale economic imbalance.