Lawmakers in the United Kingdom have urged the government to treat unbacked cryptocurrencies with the same regulatory standards as gambling instruments. The House of Commons Treasury Committee recently released a comprehensive report, emphasizing the need to regulate crypto trading and related investments under the gambling framework.
The report, spanning 28 pages and compiled by lawmakers from various political parties, specifically highlighted popular cryptocurrencies like Bitcoin and Ethereum as candidates for gambling regulation. Concerns were raised regarding the potential exploitation of these digital currencies by fraudsters and money launderers, posing significant risks to both consumers and the economy. To mitigate these risks, the committee urged the UK government to formally recognize and regulate unbacked cryptocurrencies as gambling instruments.
In justifying their stance, lawmakers argued that the trading of unbacked crypto assets resembled sports betting more closely than traditional investing. They emphasized the lack of intrinsic value, extreme price volatility, and the absence of tangible social benefits associated with cryptocurrencies like Bitcoin. Harriett Baldwin, a member of Parliament and Chair of the Treasury Committee, stated, “Consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such.”
The committee’s recommendations come amidst the government’s ongoing efforts to establish comprehensive regulations for the crypto industry. Importantly, the lawmakers cautioned against regulating retail crypto trading without considering the potential “halo effect.” They expressed concerns that strict regulations might inadvertently create a false perception of safety, leading retail investors to view crypto trading as less risky than it is.
Acknowledging the tumultuous events that unfolded in the crypto industry during 2022, the Treasury Committee’s report highlighted the significant financial losses suffered by crypto investors due to bankruptcies and scandals. These incidents underscored the inherent risks associated with crypto assets. However, the report also recognized the potential utility of blockchain technology, which underlies cryptocurrencies, in the country’s financial sector.
Also Read: Tim Berners-Lee Compares Crypto Investment to Gambling
As the debate surrounding crypto regulation continues, it remains to be seen how the UK government will respond to the Treasury Committee’s recommendations.
