“It appears the nation’s savings and investment predilections are split between two extremes: the ultra-low risk, low-return world of cash savings…and the high stakes, get-rich-quick-or-lose-it-all-trying world of crypto”, said interactive investor’s Becky O’Connor
Cryptocurrency investments are at risk of becoming more popular than traditional stock and shares ISAs at current rates of growth, according to one analyst.
On Thursday, Becky O’Connor, head of pensions and savings at online investment platform interactive investor, made the assessment after new research from the Financial Conduct Authority (FCA) that revealed that 2.3mln adults now own some crypto assets, a 21% increase on 2020, while the number subscribing to stock and shares ISAs rose by just 12.5% to 2.7mln according to the latest figures available.
READ: Around 14% of crypto investors borrowing to fund purchases, data shows
“At current rates of growth, crypto is in danger of becoming more popular than traditional stocks and shares ISAs”, O’Connor said, although she added that lockdown saving may have increased the number of people who had invested in stocks and shares ISAs since April last year, the results of which were yet to be reflected in official data.
“Nevertheless, the regulator needs to seriously consider the drivers for this trend and whether it is in the interests of people’s financial wellbeing for assets to be so polarised and kept either in cash, where value is eroded by inflation, or in crypto where you could reasonably expect to lose it all tomorrow.
“It appears the nation’s savings and investment predilections are split between two extremes: the ultra-low risk, low-return world of cash savings, where the value of money is being eroded everyday by inflation, and the high stakes, get-rich-quick-or-lose-it-all-trying world of crypto. The middle ground of slow and steady long-term investment in global stocks and shares could potentially lose out in popularity to both, despite the good it can do for people’s long term financial security through ISAs and pensions”, the analyst added.
The growing number of crypto investors in crypto was not the only piece of data in the FCA’s research to set alarm bells ringing across the financial sector, with the report also revealing that 14% of crypto investors had borrowed money in order to fund their investments in digital assets.