FCA Warns Young People Are Taking Too Many Risks with Crypto

UK financial watchdog urges shift towards shares and bonds for long-term growth

The UK’s top financial regulator has raised concerns that millions of young people are choosing cryptocurrencies like Bitcoin as their first investment, instead of traditional assets like shares or bonds.

Nikhil Rathi, Chief Executive of the Financial Conduct Authority (FCA), told MPs that this trend highlights the challenges the FCA aims to tackle under its new five-year strategy, which focuses on promoting smarter, safer investing.

Crypto Craze Among the Under-35s

Rathi revealed that a significant number of UK adults under 35 have entered the investment world through high-risk crypto assets, many of whom are unaware that they could “lose all their money”.

Research from the FCA found that around 12% of UK adults — roughly 7 million people — own cryptocurrency, with young men most likely to borrow money to invest in it.

This compares unfavourably to countries like the US, where 38% of adults own shares, or Sweden, where over 20% are active equity investors.

Regulator Pushes for More Mainstream Investing

The FCA’s new strategy encourages more people to invest in shares and bonds, especially those with more than £10,000 in investible assets. The goal is to help build long-term financial resilience and better outcomes for consumers.

“It’s concerning that so many under-35s see crypto as their first investment, rather than equities or fixed-income products,” said Rathi.

The FCA will track its success by measuring increases in participation in mainstream investments by 2030.

Regulation Catching Up with Crypto

While the UK crypto market remains largely unregulated beyond anti-money laundering checks, new legislation is in the pipeline to introduce a broader regulatory framework for digital assets.

The FCA, however, made clear that it's not solely responsible for the lack of equity ownership in the UK. Rathi pointed to issues around taxation, education, regulation, and the country’s investment culture.

A New Approach to Financial Regulation

The FCA says its new strategy will:

• Deepen trust in financial services
• Rebalance risk by supporting informed investing
• Encourage economic growth by backing innovation
• Crack down on wrongdoing, especially by regulated firms abusing their status

The watchdog also plans to make better use of AI and technology to become more efficient and effective.

Leaders across the finance sector welcomed the move. The City of London Corporation called the strategy “vital,” and the Association of British Insurers praised its future-focused direction.

Simplifying the Rule Book

In a major shake-up, the FCA announced plans to scrap over 100 pages of outdated rules covering consumer finance, investments, and mortgages.

This comes in response to Chancellor Rachel Reeves’ pledge to reduce regulatory red tape by 25%, with the aim of lowering costs for businesses and boosting competitiveness.

While these moves were praised by the industry, consumer advocates expressed concern, warning that stripping back regulations too far could weaken key protections.

“The general direction is worrying,” said James Daley of Fairer Finance. “Some proposals risk taking us backwards.”

Conclusion: Young Investors Need More Guidance

As crypto continues to capture the attention of younger investors, the FCA’s warning is a timely reminder: high risk doesn’t always mean high reward.

With the regulator pushing for more balanced, informed investing, now is the time for young people to rethink where they’re putting their money. Traditional assets like shares and bonds may lack the excitement of crypto, but they offer proven potential for long-term financial growth.

Sources: (FT.com, ChatGPT)