Nikhil Rathi warns of high risks as increasing numbers of under-35s choose cryptocurrency as their first investment.
A growing number of young people are turning to cryptocurrency as their first investment, a trend that Financial Conduct Authority (FCA) chief executive Nikhil Rathi has described as “not great”.
Speaking before the Treasury Committee, Mr Rathi raised concerns about the high-risk nature of cryptocurrency investments, warning that people could lose all their money.
“One thing I think is not great is the sheer number of under-35-year-olds for whom the financial product that they invest in first is crypto,” he told MPs.
“That’s something that we want to engage in as well because we know there’s a very high risk and you could potentially lose all your money.”
A cultural shift in investment habits
Mr Rathi suggested that shifting consumer culture towards more traditional and stable investment methods would take decades.
He pointed to a lack of financial education from an early age as a key issue, with many people lacking an understanding of fundamental financial concepts, such as percentages and compound interest.
“We have issues that are quite serious that start in schools and carry on all the way through the workplace,” he said.
He emphasised the need for better accessibility to financial products, particularly through digital platforms, to help people feel more confident in making informed investment decisions.
“We then have to make sure that we have the right accessibility to those products at the right point in people’s lives, including looking at how we can improve digital journeys, so people feel confident about accessing those products.”
Confidence in the economy and growth
Mr Rathi acknowledged that a lack of confidence in the economy also plays a role in investment decisions, with many people reluctant to take risks due to uncertainty about their returns.
Additionally, he highlighted the financial vulnerability of many consumers, stating that some individuals do not have enough savings set aside for emergencies.
However, he also pointed out that millions of people hold significant cash savings, suggesting that some may be overly cautious.
“We also have millions of people who we believe have in excess of £10,000 in cash who perhaps don’t need to be holding that much in cash,” he noted.
The risks of cryptocurrency investments
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Cryptocurrency remains an unregulated and highly volatile market, often attracting young investors with the promise of quick and substantial gains. However, the FCA has repeatedly warned that those investing in crypto assets should be prepared to lose everything.
The FCA has already introduced stricter regulations around crypto advertising to ensure potential investors understand the risks. It has also been pushing for greater consumer protection measures as the popularity of digital assets continues to rise.
Despite these efforts, young investors continue to flock to crypto markets, often influenced by social media and online influencers.
Improving financial literacy and investment awareness
To address these challenges, Mr Rathi emphasised the importance of early financial education and greater awareness of safer investment options.
He suggested that young investors need more guidance on how to build wealth sustainably, rather than taking high-stakes risks on speculative assets.
The FCA is expected to continue monitoring the rise in cryptocurrency investments among young people while working to enhance financial education and improve access to regulated investment products.
As the debate over cryptocurrency regulation continues, Mr Rathi’s comments highlight the pressing need to equip young people with better financial knowledge—before they make investment choices they may later regret.
