Online watchdog urges government to protect youngsters in crypto regulation plans
A digital watchdog is urging regulators to ensure children and young people aren’t left vulnerable to crypto scams and investment risks.
The UK government is currently drafting a swathe of regulations that will allow the Financial Conduct Authority (FCA) a greater jurisdiction and flexibility over digital assets.
However, policy chiefs at internet safety organisation Internet Matters say they are concerned future legislation will not offer enough protection to youngsters tempted into cryptocurrency investment without understanding the risks that may be involved.
A report from the not-for-profit watchdog, set up in 2014 by the UK’s then largest internet service providers BT, Sky, TalkTalk and Virgin Media, yesterday revealed nearly a quarter of teenagers aged between 13 and 16 have invested or are planning to invest in cryptocurrency.
The polling of parents and children on crypto assets also revealed that eight per cent of children have already invested in cryptocurrencies, while 15 per cent were looking to invest.
The main reason (49 per cent) for children investing was to secure their financial future against the backdrop of the cost of living crisis.
Internet Matters say the report raises concerns about a gap in regulation which could leave youngsters vulnerable to scammers.
Four in 10 of those who had invested in cryptocurrency cited the reason was ‘to earn lots of money’, while a similar number saw digital assets as ‘the future of money’.
“It is welcome that the government is beginning to clamp down on the risks posed by crypto and NFTs to consumers,” said Simone Vibert, Head of Policy and Research at Internet Matters.
“But there is no consideration of children in the measures being proposed. We want to see specific protections for children built into forthcoming regulation.”
Emerging technology consultant Gary Nuttall highlighted how many children were already aware of digital rewards and the ability to buy and sell virtual assets in the gaming world.
“It comes as no surprise to therefore learn that 15 per cent of children surveyed expressed a willingness to invest in cryptocurrencies and NFTs,” he said.
“Like traditional investing, children need to be supported with the appropriate education to ensure they are fully aware of the risks they are taking”.
Katie Watts, Head of Campaigns at MoneySavingExpert added: “This report brings to light a real gap in protection for young people who see crypto as a part of their financial lives, but are rightly worried about the consequences – and in particular, scams.
“Fraud is the crime that people in the UK are most likely to fall victim to, and crypto, with its promises of big returns, is a huge feature. Scammers use every trick in the book to get people to part with their cash – including jumping on cost of living fears and ‘cool’ crypto trends. Not only do they fraudulently steal real crypto assets, but they also get victims to buy into fake schemes that don’t exist at all.
“The Online Safety Bill, when it becomes law, will place a duty on social media firms and search engines to prevent and take down scam adverts that they are paid to publish. But the law won’t cover all forms of online advertising, like ads that are seen by both children and adults on other websites. That’s why the Government must move at speed on its work investigating the rest of the online advertising market, to close this gateway for scammers to target consumers – especially children – leaving their limited finances, mental health and self-esteem in ruins before their financial lives have even really begun.”
Internet Matters conducts a twice-yearly, nationally representative survey of approximately 2,000 parents of children aged 4-16 and 1,007 children aged 9-16 in the UK .1 In 2022, Internet Matters asked all parents and a subset of children (521 in total) aged 13-16 a particular set of questions around cryptocurrency, NFTs and e-commerce focused on their usage, views and attitudes.