Why Are UK Crypto Users Declining While Holdings Increase?

The United Kingdom has seen a notable decline of approximately 15% in the number of crypto users over the course of 2025, even as the total value of crypto holdings among UK investors rose by 10%. This divergence raises questions about the evolving dynamics of the UK crypto market, particularly in the context of regulatory changes, shifting investor profiles, and market behavior.

What happened

Data from UK-based crypto exchanges and wallet providers confirm a decline in retail user accounts during 2025. Despite fewer users, the average amount of crypto assets held per account increased, resulting in a net 10% growth in the total value of crypto holdings among UK investors. This trend is supported by disclosures from exchanges and investment funds operating within the UK market.

A significant driver behind this shift has been regulatory intervention. Early in 2025, the UK Financial Conduct Authority (FCA) implemented tighter Know Your Customer (KYC) and Anti-Money Laundering (AML) rules. These changes led to account closures and a reduction in onboarding of new retail users, as compliance requirements became more stringent and costly for exchanges and wallet providers.

At the same time, institutional investors and high-net-worth individuals (HNWI) increased their crypto allocations, as evidenced by filings from investment funds such as CoinShares and ETF issuers like 21Shares. This influx of larger investors helped buoy the total value of holdings despite the shrinking user base.

Market analysis from Chainalysis further highlights a behavioral shift in 2025, with remaining users adopting longer-term holding strategies and engaging in less frequent trading. This suggests a move away from speculative activity towards a more risk-averse posture amid heightened market volatility.

Why this matters

The simultaneous decline in user numbers and rise in holdings signals a maturing UK crypto market characterized by consolidation among wealthier and institutional investors. This concentration of assets in fewer hands may influence market liquidity, trading volumes, and the overall accessibility of crypto investments for retail participants.

Regulatory tightening by the FCA appears to have had a material impact on retail participation. By imposing stricter KYC and AML requirements, the regulator has effectively raised barriers to entry for smaller or casual investors, potentially reshaping the demographic composition of the market. This regulatory environment may promote greater compliance and security but could also limit broader retail engagement.

Moreover, the shift toward long-term holding and reduced trading activity among remaining users suggests increased risk aversion, possibly a response to 2025’s market volatility. Such behavioral changes may affect the dynamism of the UK crypto ecosystem, influencing product development, exchange revenues, and investor strategies.

What remains unclear

Despite these insights, several important questions remain unanswered. The specific demographic profiles of users exiting the market—such as their age, income levels, or geographic distribution—are not detailed in available data, leaving gaps in understanding who is most affected by these changes.

It is also unclear how much of the user decline is directly attributable to regulatory factors versus broader market sentiment or external economic conditions. The relative influence of these elements cannot be precisely measured with current information.

Additionally, the role of alternative crypto platforms, such as decentralized exchanges or non-UK-based services, in attracting new users is not addressed. This omission means the full picture of UK resident crypto activity might be underrepresented in traditional exchange data.

Finally, data on off-exchange or peer-to-peer crypto holdings in the UK is limited or undisclosed, complicating efforts to fully assess user engagement and asset distribution beyond formal platforms.

What to watch next

• Further regulatory updates or clarifications from the FCA regarding KYC and AML policies, and their impact on market participation.
• Disclosures from UK crypto exchanges and investment funds for updated user and holding metrics beyond 2025.
• Emerging data on the adoption of alternative crypto platforms or decentralized finance (DeFi) products by UK users.
• Market behavior analyses focusing on trading volumes, holding periods, and volatility responses among UK investors.
• Research or surveys providing demographic breakdowns of UK crypto users, including motivations for exiting or remaining in the market.

The evolving UK crypto landscape reflects a complex interplay between regulatory frameworks, investor composition, and market behavior. While asset consolidation among wealthier investors supports rising total holdings, the decline in user numbers raises questions about the inclusiveness and future growth of the sector. Addressing the remaining uncertainties will be critical for policymakers and market participants seeking a comprehensive understanding of the UK crypto market’s trajectory.

Source: https://www.coindesk.com/markets/2025/12/16/number-of-crypto-users-in-the-uk-drops-even-as-amount-held-increases. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.