Crypto Awareness Soars As EU Passes Landmark MiCA Rules

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Cryptocurrency awareness has soared in the UK in recent years, yet only a small minority of people understand how digital tokens work.

Findings by the Financial Services Compensation Scheme (FSCS), the UK’s deposit insurance body, show that 91% of individuals who hold savings and investments have heard of cryptocurrencies.

However, just 11% of people within this group said they had a good understanding of how cryptocurrencies work or how to use them, while 27% were open to investing in cryptocurrency in the future.

The findings come as the FSCS releases a new report into crypto adoption and investing across the UK following research carried out in March 2023 entitled ‘Attitudes towards investing in cryptocurrencies’.

Related link: Is my crypto covered by the Financial Services Compensation Scheme?

Bitcoin is still the crypto king

The report also found that, perhaps unsurprisingly, Bitcoin was the most well-known coin – 74% of those who were aware of cryptocurrencies had heard of the original digital asset.

Crypto investment returns saw a fairly even split between positive and negative – 35% said the performance of their investment was better than expected, 32% said it was worse, while 30% said it was what they expected.

Interestingly, 23% said they would consider getting into debt to buy cryptocurrencies, while 64% of those aware of crypto likened it to gambling.

According to a recent report on crypto ownership in the UK by the Bankless Times, some 4.2million people currently own crypto in the UK, which represents 6.2% of the population.

Of these, 56% are aged 18-34, with only 4.6% being aged 55 or above. Crypto ownership is also much higher amongst wealthier investors, with 40% of those with an income of £200,000 or more having crypto in their portfolios.

The research comes after landmark crypto legislation was passed by the European Parliament in April 2023 which will eventually see new rules applied to the industry across the 27 countries that make up the bloc.

New MiCA rules broadly welcomed

The new laws, known as Markets in Crypto-Assets (MiCA), have been broadly welcomed by some of the biggest players in the crypto industry, including the bosses of exchanges like Coinbase and Binance.

MiCA is seen by many as a positive step forward in creating a unified regulatory framework for crypto assets which will encourage innovation and allow the market to grow.

The new regulations are designed to ensure financial stability while protecting investors from potential harm. They will bring certain types of crypto assets into the regulatory framework, which will also create new laws for stablecoins.

The four main objectives of MiCA are:

• Protecting consumers and investors
• Supporting innovation and competition
• Ensuring financial stability
• Establishing a legal framework for crypto assets.

The MiCA rules are expected to come into force towards the end of 2024 after further rounds of discussions are held.

CBDC development presses ahead

While the EU appears to be ahead of the curve when it comes to crypto regulation, it’s also at the forefront of Central Bank Digital Currency (CBDC) development.

In April 2023 the European Central Bank (ECB) published a report into plans for developing a digital Euro, which included granular details about the distribution and functionality of a CBDC.

According to Guy Turner from crypto portal The Coin Bureau said: “Make no mistake, it is coming and perhaps sooner than you may think.”

UK increasingly crypto friendly

While not part of the EU anymore, the UK Government has ambitious plans to make Britain a global crypto hub and encourage companies involved in the sector to invest here.

As part of this HM Treasury held a consultation titled ‘Future Financial Services Regulatory Regime for Cryptoassets’ during the first quarter of 2023.

The government says it’s “committed to introducing a new regulatory regime for crypto assets, reflecting the risks and opportunities they present”.

It went on: “The proposals seek to deliver on the ambition to place the UK’s financial services sector at the forefront of crypto asset technology and innovation and create the conditions for crypto asset service providers to operate and grow in the UK, whilst managing potential consumer and stability risks.”

Although the UK is still in the early stages of crypto regulation, the approach so far is seen as encouraging by crypto proponents who believe it’s essential for increased adoption of crypto and innovation in the sector.

This has shaped the Financial Services and Markets Bill (FSMB) which is designed to provide a framework for the forthcoming regulations.

At the same time, the UK’s Tax Authority – HM Revenue & Customs (HMRC) – is looking at ways of cracking down on crypto tax evasion by businesses.

A consultation document about how to modernise tax collection from non-paying businesses includes provision for empowering the agency to confiscate crypto assets from companies.

The document states that if HMRC has the power to recover debts from business bank accounts, it should also have the ability to gain access to digital wallets in order to seize crypto assets.

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