Crypto should be regulated as gambling, UK lawmakers say
The UK parliament’s treasury committee has released a report recommending that cryptocurrencies such as Bitcoin and Ether be regulated as gambling due to potential risks posed to consumers. The report calls for the UK government to implement its first set of rules for cryptoassets, which currently only comply with anti-money laundering safeguards. The report notes that Bitcoin and Ether account for two-thirds of all cryptoassets and are not backed by any currency or asset, leading to price volatility and the possibility of complete loss of investment. The committee also warned that regulating retail trading and investment in unbacked cryptocurrencies as a financial service could create a false sense of security for consumers, leading them to believe that the activity is safer than it is or that they are protected when they are not.
The Financial Conduct Authority has previously cautioned consumers that they could lose all their money invested in cryptocurrencies. According to official figures, around 10% of UK adults currently hold or have held cryptoassets. The report underscores that while the global crypto market has a total market capitalization of around $1.2 trillion, the collapse of the crypto firm FTX exchange last year highlighted the need for greater regulation of the sector.
The report’s chair, Harriett Baldwin, described the cryptoasset industry as a “wild west” with risks posed to consumers. The European Union approved the world’s first comprehensive rules for crypto markets on Tuesday, while international regulators are expected to propose global standards shortly. While the report acknowledged the potential of underlying technology used by cryptoassets to improve payment efficiency, it maintained that regulators should prioritize consumer protection in the face of the potential risks posed by cryptocurrencies.