The U.K.’s House of Commons Committee report stated in a report dated May 17 that trading and investment in unbacked crypto assets resembles gambling.
The recommendation comes as the U.K. has been aiming to bring specific crypto regulations within the next 12 months.
U.K. Lawmakers’ Crypto Recommendations
U.K. legislators stress that effective regulation of crypto assets should help stimulate innovation. They argue it should maximize the potential benefits of the technology for the country while limiting its risks.
Therefore, one of the most crucial recommendations in the report is calling unbacked crypto assets akin to gambling. The Regulating Crypto document underlines,
“Consumer speculation in unbacked cryptoassets such as Bitcoin and Ether is one area where we have particular concerns, and think the Government needs to take a different approach in order to better protect consumers from harm.”
The observation is that cryptocurrencies lack inherent value. In addition, their fluctuating prices can lead to significant losses or gains.
The report states,
“We therefore strongly recommend that the Government regulates retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service, consistent with its stated principle of ‘same risk, same regulatory outcome.'”
In the U.K., gambling is regulated by the Gambling Commission under the Gambling Act 2005. The framework provides guidance, prevents problem gambling, and enforces measures like anti-money laundering and counter-terrorism financing in the gambling industry. Businesses under the commission’s regulation include bingo halls, lotteries, arcades, betting shops, online betting companies, and casinos.
U.K. Aims to be a Global Hub
Charles Randell, former chair of the Financial Conduct Authority (FCA), agrees with this perspective. He noted in the report that speculative crypto investments are essentially gambling and should be regulated and taxed accordingly. Meanwhile, the FCA notes that “crypto gambling addictions are rising, and there are limited controls in place to protect vulnerable consumers.”
The suggestions around regulating crypto in the U.K. come a month after the country vowed to provide legislative guidance. Andrew Griffith, economic secretary to the U.K. Treasury, told CNBC in an interview last month that specific laws around cryptocurrency could come in the next 12 months.
The top lawmaker had reiterated, “Wherever possible, we want to see the same asset, the same transaction regulated in the same way.” He also acknowledged the presence of potential opportunities within the crypto asset or distributed ledger space. Griffith expressed intentions to leverage those opportunities.
U.K. Prime Minister, Rishi Sunak, has also said that he is looking at Britain as a “global hub” when he was holding the finance ministry. The country’s outlook towards crypto seems to be helping the U.K. During a recent interaction, Patrick Hillmann from Binance criticized U.S. regulations while expressing a preference for the regulatory environment in the United Kingdom.
Over the past decade, the cryptocurrency industry has experienced tremendous growth. Notably, the U.K. has been at the forefront of this expansion, as BeInCrypto previously noted. The U.K.’s well-established financial sector has played a significant role in fostering the growth of its crypto industry.
According to a recent report by the Financial Service Compensation Scheme (FSCS), a government organization responsible for consumer protection, 91% of adult consumers in the U.K. have heard about cryptocurrency.
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