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After receiving recognition both from traditional finance and regulators, cryptocurrency is set to solidify its position in the UK and globally. Still, the industry's treatment of retail investors remains outdated, with many companies not adapting their approach to the needs of a growing non-crypto native consumer base.

A recent survey by Finder shows that 2023 was the pivotal year for crypto's popular perception. Successfully weathering the storm of 2022, the industry managed to restore the trust of consumers and advance to the popular discourse in mainstream media. In this opinion column we highlight the on-going crypto narratives, challenges for industry growth and overall market potential.

Mainstream Media Picks Up the Crypto Narrative

Traditionally, mainstream media outlets have been treating blockchain-related topics with caution. Web3 enthusiasts had to resort to social networks, forums, or crypto-native media, contributing to the emergence of a crypto echo chamber that limited the entrance of new participants.

However, with the gradual advancements in regulation, as well as the overall maturity of the industry and recognition from institutional finance, crypto's appearance in the mainstream headlines has become more frequent. Individuals new to the crypto sphere often become acquainted with the concept of cryptocurrencies through the coverage of evolving digital asset policies in the UK and other global jurisdictions.

The government's ambition to establish the country as a leading global cryptocurrency hub has significantly amplified discussions around digital currencies in mainstream media Additionally, the rise of political meme coins, which gain popularity in tandem with election cycles, exemplifies how even political events can influence the cryptocurrency market now.

Overall, this increased exposure, combined with the recent authorization of spot Bitcoin ETFs, has heightened public awareness and enhanced the perceived legitimacy of cryptocurrency as a viable investment choice. These developments suggest a shifting landscape where cryptocurrency is increasingly regarded as a trustworthy and accessible investment option, attracting a broader spectrum of investors.

Rebuilt Trust: the Post-2022 Recovery Is Finalised

Several high-profile collapses in late 2022 brought significant trust erosion to the industry. These include the Terra debacle, the downfall of Three Arrows Capital, and the particularly shocking implosion of FTX. These events led to substantial financial losses for many investors and a profound distrust in the stability of cryptocurrency assets and the security of Centralized Exchanges. Even in 2024, as many as 17% of UK investors continue to believe that cryptocurrency is a scam.

Still, the most recent data shows the industry's coordinated effort was sufficient to mitigate the blow. Many centralised exchanges quickly implemented measures to regain user confidence, such as Proof of Reserves and recurring third-party audits. The introduction of protection funds by exchanges such as Bitget, served as financial safety nets for investors' assets, playing a crucial role in restoring trust. These funds reassured investors about the security of their holdings on exchanges, encouraging them to continue or resume their investment activities. As a result, 42% of investors were investing more adventurously in March 2023 compared to September 2022.

The Persisting Gender Gap

The demographic profile of an average 2024 crypto investor in the UK is rather surprising at first glance. Despite being largely labelled a Zoomer investment product, cryptocurrency is most widespread among people from 25 to 44 years, where the percentage of crypto investors is 18.8%. Ownership among other age groups is almost twice as low, while only 3% of people aged 55 and more hold any digital assets.

A more alarming data is the existing gender disparity. In 2024, around 1 in 7 men have invested in cryptocurrencies at some point in their lives compared to around 1 in 15 women, meaning that men in the UK are twice as likely to express interest in crypto. This gender gap is similar to the ones in Stocks and Shares ISAs (30% vs 17%), SIPPs (19% vs 8%) or General Investment Accounts (16% vs 9%).

The financial industry has historically been male-dominated – a reflection of broader societal norms where financial decision-making and access were predominantly reserved for men. This legacy has contributed to the current disparity in investment participation rates between men and women. Addressing this issue requires a multifaceted approach, consisting of education and empowerment, representation and visibility, and inclusive initiatives, like Bitget's Blockchain4Her fund. These actions will encourage female participation in crypto investing and foster the emergence of women role models in the industry. Overall, large-scale education programs are crucial to break the gender gap status quo and attract a larger non-digital native audience to cryptocurrency.

Crypto in the UK: Developments to Expect Through 2024-2025

The role of cryptocurrency in the UK's economy is poised for significant change in the coming year, driven by strategic shifts towards the adoption of digital assets. A key development in this direction is the potential introduction of a UK-specific stablecoin, the GBDC, anticipated to launch as early as summer 2024. This move signals the UK's intent to integrate cryptocurrencies more closely into its financial system, offering a digital asset tied to the stability of the British pound and potentially facilitating smoother, more efficient transactions within the digital economy.

Additionally, the recent approval of Exchange Traded Notes (ETNs) for institutional investors by the Financial Conduct Authority (FCA) marks a significant step towards mainstreaming cryptocurrency investments in the UK's financial markets. This could pave the way for a broader acceptance and integration of digital assets, mirroring the positive impacts observed in other jurisdictions following similar regulatory approvals.

However, the UK faces notable challenges in its path towards becoming a leading crypto hub. A comprehensive regulation of digital assets will help establish a more inclusive financial ecosystem, attract investment, and promote further growth.