Self-regulatory group CryptoUK and cryptocurrency exchange Kraken have slammed a recent report by a group of UK lawmakers that suggested cryptocurrencies should be regulated in a similar way to gambling.
In a May 17 report, a House of Commons Treasury committee "strongly recommended" unbacked cryptocurrencies as gambling amid concerns about "significant" consumer risks associated with the asset class, such as price volatility and lack of intrinsic value. To regulate.
It ultimately calls for cryptocurrencies to be regulated according to the principle of "same risk, same regulatory outcome." The move has not been well received by local players, especially given that the UK is believed to be moving towards becoming a progressive crypto hub. In a statement shared with Cointelegraph on May 17, CryptoUK argued that “taking this approach would not take into account the nuances of the industry and the real opportunities for inward investment and growth in the UK economy as a whole,” adding:
"No other global jurisdiction has adopted this approach, and with reference to the EU's MiCA, we need a bespoke and tailored regulatory approach across the industry to ensure the UK does not become a hostile environment for business registration." The group also stated that such an approach could end up causing UK consumers to seek out offshore crypto platforms to engage, which it believes "completely defeats the goal of protecting these consumers through regulation." In Kraken's statement, the company emphasized that it "fundament ally" disagrees with the Treasury's " conclusion that cryptoassets have no intrinsic value.”
"It is regrettable that the Commission does not support the chances that the UK has to become a true global leader in our fast-growing industry," the company said, adding: "The Commission's recommendation that crypto assets should be regulated as a gaming product is misleading and entirely inappropriate for UK consumers."
It argued that not only had it "missed the purpose and potential of the technology", but said gambling protections did not provide the same safeguards as financial services regulations. CryptoUK notes that if crypto trading is considered gambling, capital gains tax could be lost:
“Gambling is exempt from capital gains tax. Does the UK government want to deduct tens of millions of pounds in tax from the proceeds of buying and selling unsecured crypto assets?” The Treasury Department has yet to define the specific scope for regulating cryptocurrencies as “gambling”; however, the report recommends strong regulations and guidelines for consumer protection, anti-money laundering, and terrorist financing.
