Crypto Retail Should Be Regulated Like Gambling: UK Lawmakers

Trading in so-called “unbacked cryptoassets” such as Bitcoin (BTC) and Ether (ETH) should be regulated as gambling rather than a financial service, a panel of UK lawmakers said in a new report.

The United Kingdom is currently working on a crypto regulatory framework that would combine existing financial asset laws with new crypto-specific rules.

However, in a May 17 House of Commons Committee report, the UK Treasury Committee strongly recommended that crypto trading and retail investment activities be regulated as gambling, in line with the principle of “same risk, same regulatory outcome.”

Published today

We just published our report on cryptoassets, outlining our recommendations for the government’s approach to regulating this market.

Learn more and read the full report pic.twitter.com/GvDQfiGhPU

— Treasury Commission (@CommonsTreasury) May 16, 2023

It argued that the price volatility and lack of intrinsic value mean that unbacked crypto assets “will inevitably pose significant risks to consumers”.

Treasury Committee Chair Harriett Baldwin described Bitcoin and Ether as accounting for two-thirds of the total crypto asset market cap, both of which she claimed are “unbacked.”

“We are concerned that regulating retail and investment activities in unsupported crypto-assets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is more secure than it is, or protected if it is not. .”

In the United Kingdom, all gambling – whether online or land-based – is regulated by the Gambling Commission under the Gambling Act 2005. The oversight includes businesses such as bingo halls, lotteries, gambling shops, online gambling companies and casinos.

In its arguments, the legislators referred to written statements by Dr. Larisa Yarovaya, an associate professor from the University of Southhampton, who said crypto exchanges, online trading platforms and other crypto asset businesses should be regulated with the same rigor as crypto speculation. can be addictive.”

In a small victory for crypto, the commission said it also recognized the potential of some crypto assets and their underlying technology to bring benefits to financial services and markets, such as lowering the cost of cross-border payments and improving financial inclusion.

It said there should be an effective regulatory framework in place to support these developments in the UK while mitigating some of the risks associated with crypto assets.

“We therefore welcome the government publishing proposals on how it intends to regulate cryptoassets used in financial services,” the committee wrote.

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Including Chairman Harriet Baldwin, who was once the Treasury’s Economics Secretary, the committee is made up of a total of 11 MPs from the Labor and Conservative parties, as well as the Scottish National Party.

The commission said it launched its crypto industry inquiry in July 2022 to examine the role of cryptoassets in the UK

Research conducted by His Majesty’s Revenue and Customs (HMRC) — the country’s tax authority — found last year that 10% of UK citizens own or have owned crypto and more than 55% have never sold any of it.

Chainalysis ranked the United Kingdom 17th in its crypto adoption index for 2022.

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