A panel of cross-party British lawmakers is going against the government’s stance and recommended trading of ‘unbacked crypto assets like Bitcoin and Ether to be regulated as gambling. The recommendations came when the UK government was working to regulate cryptocurrencies as financial services.
A House of Commons Committee report published on Wednesday highlighted that cryptocurrencies are volatile, exposing traders to a high risk of losses, and, as such, these instruments resemble gambling.
“The Committee concludes that cryptocurrencies pose significant risks to consumers, given their price volatility and the risk of losses. Given retail trading in unbacked crypto more closely resembles gambling than a financial service, the MPs call on the Government to regulate it as such,” the report stated.
Further, the Committee is concerned that the British Government’s labeling crypto trading as financial services will create a ‘halo’ effect, making consumers believe that crypto trading is safe and protected.
Gambling Is Regulated
Gambling is legal in the United Kingdom. Both online and land-based gambling, including bingo halls, lotteries, betting shops, online betting companies, and casinos, are regulated by Gambling Commission under the Gambling Act 2005.
The UK also allows spread betting, a type of financial derivative that allows you to bet on the future price of an asset. Though spread betting is considered gambling in the country for tax purposes, the activities are regulated by the Financial Conduct Authority (FCA) and not the Gambling Commission.
According to the HM Revenue & Customs, around 10 percent of UK adults hold or have held crypto assets. Further, Chainalysis ranked the UK 17th in its crypto adoption index.
“The events of 2022 have highlighted the risks posed to consumers by the crypto asset industry, large parts of which remain a wild west,” said Harriett Baldwin MP, Chair of the Treasury Committee.
“With no intrinsic value, huge price volatility, and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service and should be regulated as such. By betting on these unbacked ‘tokens,’ consumers should be aware that all their money could be lost.”
Meanwhile, the Committee acknowledged that the decentralized technology “may bring benefits to financial services,” particularly in cross-border transactions and payments. Its criticisms also did not include central…
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