UK Lawmaker Group Clashes With Treasury Over Treating Unbacked Crypto as Gambling
A group of UK lawmakers has recommended that unbacked digital assets such as bitcoin (BTC) and ether (ETH) be regulated as gambling. In a report published on Wednesday, the Treasury Committee expressed concerns that regulating these assets as financial services would create a “false sense of security” for consumers. The committee likened investing in cryptocurrencies to gambling, citing their lack of intrinsic value, extreme price volatility, and lack of social benefit. The report called on the UK government to regulate retail trading and investment in these assets as gambling, in line with the principle of “same risk, same regulatory outcome.”
The UK government had recently proposed regulating the local crypto industry by extending existing financial markets rules to create an authorization regime for digital asset service providers. However, the Treasury Committee expressed concern about the plan and said it should be regulated as gambling instead.
Crypto assets globally were worth around $3 trillion in 2021 before billions were wiped out in a subsequent market crash. The collapse of stablecoin issuer Terra and later the fall of crypto exchange FTX contributed to the market crash. The committee’s report called for the government to keep up with potentially productive innovations that could come from the technologies underlying crypto assets.
Crypto advocates disagree with the committee’s call to regulate some crypto assets as gambling. Richard Cannon, partner at UK-based Stokoe Partnership Solicitors, said that modern regulated economies should confront and engage with the evolution of finance and develop a sophisticated regulatory regime. The UK government has stood by its proposal to regulate crypto as financial services, saying that the risks posed by crypto are typical of those that exist in traditional financial services.