Trading of so-called "unsecured cryptoassets" such as Bitcoin and ether. It should be regulated as gambling rather than a financial service, a group of British lawmakers said in a new report.
The UK is currently developing a crypto regulatory framework that combines existing financial assets law with new crypto-specific rules. However, in a report by a House of Commons committee on May 17, a UK Treasury committee “strongly recommended” that retail cryptocurrency trading and Investment activities be regulated as gambling, consistent with the principle of “same risk, same regulatory outcome.” .
It argued that price volatility and lack of intrinsic value meant that unbacked crypto assets would "inevitably pose significant risks to consumers."
Harriett Baldwin, chair of the Treasury committee, described bitcoin and ether as accounting for two-thirds of the total market capitalization of crypto assets, which she claimed were both “unsecured.” “We are concerned that regulating retail trading and investing in unsecured cryptoassets as a financial service can create a 'halo' effect, leading consumers to believe that such activities are safer than they are, or that they are not. are protected." In the UK, all gambling activity - whether online or brick-and- Mortar - is regulated by the Gambling Commission under the Gambling Act 2005. It regulates businesses such as bingo halls, lotteries, betting shops, online bookmakers and casinos, with the aim of preventing problem gambling and applying anti-money laundering safeguards .
In its argument, the lawmaker referred to a written statement by Dr Larisa Yarovaya, an associate professor at the University of Southampton, who said that cryptocurrency exchanges, online trading platforms and other cryptoasset businesses should be regulated with the same rigor as cryptocurrency speculation “would make people Addicted."
A small win for cryptocurrencies, the commission said, is that it also recognizes the potential of certain crypto assets and their underlying technology to bring benefits to financial services and markets such as reducing the cost of cross-border payments and improving financial inclusion. It said There should be an effective regulatory framework to support these developments in the UK while mitigating some of the risks associated with crypto assets.
"We therefore welcome the government's proposals on how it plans to regulate crypto assets used in financial services," the committee wrote. The committee has 11 MPs from the Labor and Conservative parties, as well as the Scottish National Party, including Baldwin, who was previously the Treasury's economics secretary.
The committee said it had launched an inquiry into the crypto industry in July 2022 to explore the role of crypto assets in the UK.
Research conducted by HM Revenue and Customs (HMRC) the nation’s tax authority last year revealed that 10% of UK citizens own or have held cryptocurrencies, with more than 55% of them having never sold any cryptocurrencies. Chainalysis ranks the UK 17th in its 2022 Crypto Adoption Index.
