UK Youths Turning to Crypto Over Stocks

Nikhil Rathi, the head of the UK’s Financial Conduct Authority (FCA), has raised alarms over the increasing number of young adults turning to cryptocurrency as their first investment choice.

Speaking to members of Parliament, Rathi highlighted that millions of individuals under 35 are opting for high-risk assets like Bitcoin instead of traditional investments such as stocks or bonds.

He warned that investing in digital currencies carries the potential for significant losses.

Rathi also pointed out a concerning trend: while 38% of Americans and more than 20% of Swedes own equities, the proportion of Britons who invest in shares is much lower, particularly among younger generations, who are increasingly attracted 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.”

FCA Pushes for More Mainstream Investments Among Young Britons

The FCA’s newly unveiled five-year strategy, presented on Tuesday, centers on four key objectives, one of which is helping consumers make more informed financial decisions.

As part of its approach, the FCA will track how individuals with over £10,000 in investible assets opt for “mainstream investments” by 2030.

Rathi expressed concern over the growing trend of under-35s turning to cryptocurrency as their first investment, noting that millions of young people in the UK are entering the market in this way, according to a YouGov survey of nearly 2,200 adults.

Currently, the UK’s crypto sector remains largely unregulated, with companies only required to register with the FCA for anti-money laundering compliance.

However, the government plans to introduce specific legislation to establish a more robust regulatory framework for the crypto industry.

Last year, the FCA estimated that about 12% of UK adults, or roughly 7 million people, owned cryptocurrency, with younger men particularly likely to borrow money to fund their investments.

Rathi also pointed to the country’s relatively low levels of share ownership, attributing this to a mix of factors, including tax policy, education, and cultural attitudes toward investing.

He said:

“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.”

Under its new strategy, the FCA aims to “deepen trust, rebalance risk, support growth, and improve lives.”

While the regulator has faced criticism in the past for potentially stifling innovation, industry leaders have given the plan cautious approval.

Authority to Harness AI for Enhanced Efficiency and Effectiveness

A key component of the FCA’s new strategy is leveraging technology, particularly AI, to enhance its efficiency and effectiveness.

The regulator also aims to intensify its efforts against financial crime, focusing specifically on individuals who exploit their regulatory status to cause harm.

Additionally, the FCA revealed plans to streamline its extensive regulatory framework by removing over 100 pages of rules related to consumer finance, investments, and mortgage lending.

This initiative follows Chancellor Rachel Reeves’ “radical action plan” to cut red tape, aiming to reduce regulatory costs for businesses by 25%.

With the FCA’s rulebook currently exceeding 10,000 pages, the goal is to alleviate burdens for legitimate operators while maintaining crucial consumer protections.

However, James Daley, head of the research group Fairer Finance, expressed concerns over the potential consequences of these changes.

He noted:

“The general direction of travel is worrying.”

He cautioned that, while aimed at reducing regulatory burdens, some of the proposed adjustments could ultimately represent a step backward.