Most young British investors enter the cryptocurrency market, driven by social-media chatter and news, according to a survey.
The UK's Financial Conduct Authority (FCA) surveyed 1,000 people aged 18 to 40 who had invested in high-risk assets such as cryptocurrencies or forex products.
58% of respondents said their decision was prompted by streams of messages about specific investments on social media, in news outlets, or from other people.
76% of investors said they were spurred by competition with friends, acquaintances, family, and even with their past investments. 68% likened it to gambling.
At the same time, only 21% of respondents were considering holding their latest investments for more than a year.
The FCA had assumed that investors in high-risk products were more aware of them than the general public. However, the survey showed that 69% of respondents wrongly believed that cryptocurrencies were regulated by the regulator.
«As a result, they were unlikely to understand the absence of investor protection and the risk to their money», — the FCA said.
The regulator has launched a five-year information campaign, InvestSmart, with a budget of £11 million to raise consumer awareness of high-risk investments.
«We are seeing more people chase high returns. But that can mean higher risks as well. We want to give consumers more confidence in investing and help them do so safely, aware of the level of risk», — Sarah Pritchard, the FCA's Director of Markets, said.
Earlier in September, FCA chief Charles Randell stated that the regulator should strengthen protection for consumers investing in cryptocurrencies without proper understanding of the risks involved, but not go to extremes.