UK Treasury Committee: Crypto Should Be Treated Like Gambling
The UK Treasury Committee released a report compelling the government to regulate retail crypto trading not as financial assets but as gambling instruments.
The House of Commons Treasury Committee published a report earlier today in which they want crypto trading and related investments assets to be held to the same standards as gambling. The 28-page report compiled by lawmakers from various parties argues that unbacked, mainstream crypto assets such as Ethereum (ETH) and Bitcoin (BTC) should be regulated like gambling instruments.
Lawmakers have argued that fraudsters and money launderers’ potential use of crypto threatens consumers and economic stability. To that end, lawmakers have urged the UK government not to regard crypto trading as a financial instrument. The Committee further opined that the volatility associated with crypto trading is akin to sports betting rather than investing.
Harriet Baldwin, member of Parliament and Chair of the Treasury Committee, said:
With no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like bitcoin more closely resembles gambling than a financial service, and should be regulated as such.
The Committee further warned that regulating consumer crypto trading as a financial instrument will create a ‘halo effect’, making consumers think it is safe. According to a summary of the report:
The Committee is also concerned that regulating consumer crypto trading as a financial service – as proposed by the Government – will create a ‘halo’ effect, leading consumers to believe this activity is safe and protected, when it is not.
However, the report acknowledges that blockchain technology, which underlies crypto, may be helpful to the UK’s financial sector.
Lawmakers Scramble to Regulate the Crypto Industry
The Committee’s report comes against the backdrop of the catastrophic events of 2022. A string of bankruptcies and liquidations cost investors billions, sent the overall crypto market spiralling, and highlighted the need for industry regulation. The United States has made little progress in improving its industry oversight, while the UK has taken steps to introduce a regulatory framework.
Recognising the dire need for industry oversight, the European Union (EU) has introduced its Markets in Crypto Asset (MiCA) regulation which aims to give clarity and transparency to the industry. On Tuesday, the Economic and Financial Affairs Council of the EU unanimously voted to adopt laws and directives relating to the legislation, inching MiCA ever so close to taking effect in 2024.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.