UK Panel Wants to Regulate Crypto Just Like They Do for Gambling
Due to the extremely volatile nature on crypto assets several lawmakers have treated them akin to gambling. A panel of UK lawmakers recently stated that retail investing in unbacked digital assets such as Bitcoin should have the same regulations like gambling since they are extremely volatile and have no intrinsic value.
In a report published on Wednesday, May 17, the Treasury Select Committee has "strongly recommended” such treatment for trading of digital tokens. This recommendation comes following months-long inquiry into how digital assets should be overseen. Also, this is a counter proposal to the government’s consideration to regulate crypto assets just like the traditional financial assets.
However, by regulating retail crypto trading just like gambling would be a departure from how other jurisdictions treat the asset class. The report noted: “We are concerned that regulating retail trading and investment activity in unbacked cryptoassets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is, or protected when it is not”.
Citing data from HM Revenue & Customs, the report mentioned that 10% of the UK adults hold cryptocurrencies. As per the convention, the government will have to respond to the report within just two months of publication.
As we know, the UK has levied steep taxes on the gambling industry which might also be the case for crypto assets going ahead. The motive seems to be creating a deterrence for retail players to participate in the crypto space.
According to Treasury Committee Chair Harriett Baldwin, Bitcoin and Ether together constitute approximately two-thirds of the overall market capitalization of crypto assets, both of them being “unbacked”.
Bladwin added: “We are concerned that regulating retail trading and investment activity in unbacked cryptoassets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is, or protected when it is not.”
Acknowledging the positive aspects of cryptocurrencies, the committee highlighted their potential to enhance financial services and markets. It specifically mentioned benefits like cost reduction in cross-border payments and increased financial inclusion.
To facilitate these advancements in the United Kingdom, the committee emphasized the importance of establishing a robust regulatory framework that addresses the risks associated with crypto assets. “We therefore welcome the Government publishing proposals for how it plans to regulate cryptoassets used in financial services,” the Committee wrote.