Crypto retail trading should be regulated as gambling: UK lawmaker

The trading of so-called “unbacked cryptoassets” such as bitcoin (BTC) and ether (ETH) should be regulated as gambling, not a financial service, a panel of British MPs said in a new report.

The United Kingdom is currently working on a crypto regulatory framework that will blend existing financial asset laws with new crypto-specific regulations.

However, May 17 in the House of Commons committee reportsThe UK Treasury Committee “strongly recommends” the same investment activity as retail crypto trading and gambling, in line with the principle of “same risk, same regulatory outcome”.

It argued that price volatility and a lack of intrinsic value meant that unbacked crypto assets “would inevitably pose significant risks to consumers.”

Treasury Committee Chair Harriet Baldwin described bitcoin and ether as accounting for two-thirds of the total market capitalization of crypto assets, both of which she claimed are “unbacked”.

“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 safe, or protected when it is not.” “

In the UK, all gambling – whether online or land-based – is regulated by the Gambling Commission under the Gambling Act 2005. Its oversight includes businesses such as bingo halls, lotteries, betting shops, online betting companies and casinos, with the aim of curbing problem gambling and implementing anti-money laundering safeguards.

The graph used by the committee as proof of the volatility of crypto. Source: Yahoo Finance, UK Parliament

MPs cited written in their arguments statement An associate professor at the University of Southampton, Dr. From Larisa Yarovaya, who said that crypto exchanges, online trading platforms and other crypto-asset businesses should be regulated with the same rigor as crypto speculation “can be addictive.”

In a small win for crypto, the committee said it also recognized the potential of some crypto assets and their underlying technology to bring benefits to financial services and markets – such as reducing the cost of cross-border payments and increasing financial inclusion. improve.

It said that the UK must have an effective regulatory framework to support these developments while mitigating some of the risks associated with crypto assets.

Excerpt from the Fifteenth Report for the session 2022-23. Source: UK Parliament

“We therefore welcome the government’s publication proposals on how it plans to regulate cryptoassets used in financial services,” the committee wrote.

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Including Baldwin, who once served as Economic Secretary to the Treasury, the committee consists of a total of 11 Members of Parliament from the Labor and Conservative parties as well as the Scottish National Party.

The committee said it launched its investigation into the crypto industry in July 2022 to ascertain the role of cryptocurrencies in the UK

Research conducted last year by Her Majesty’s Revenue and Customs (HMRC) – the country’s tax authority – revealed that 10% of UK citizens own or hold crypto with over 55% having never sold any.

Chainalysis rank The United Kingdom ranks 17th on its 2022 Crypto Adoption Index.

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