An influential group of MPs has called on the government to regulate consumer cryptocurrency trading and speculation as a form of gambling.
Cross-party Treasury committee claims digital currency bitcoin And ethereum “have no intrinsic value and no useful social use” — in addition to consuming large amounts of energy, they are often used by criminals to commit fraud.
it is in The government announced proposals to regulate the cryptocurrency industry in February By incorporating it into financial services law.
But a better approach, says the congressman, is to recognize that speculation in unsecured cryptoassets — such as Bitcoin — “is more akin to gamble rather than financial services.”
It recommends instead applying safeguard rules that oversee agencies such as lotteries, bookmakers and casinos.
According to HM Revenue and Customs, around 10% of UK adults speculate in crypto assets.
The commission’s new report warns that digital currencies represent a “significant risk” due to “huge” price volatility, with customers risking losing everything they have invested.
it says there is evidence for cryptocurrency Speculation is on the rise – and there are warnings that there are currently limited controls in place to protect vulnerable consumers.
Lawmakers said they were concerned that placing the industry under financial services regulation “would have a ‘halo’ effect, leading consumers to believe the activity was safer than it was, or protected when it wasn’t”.
“We therefore strongly recommend that the government regulate retail trading and investment activities in unsecured crypto assets as gambling rather than financial services, in line with its stated principle of ‘same risk, same regulatory outcome’,” the report added.
The “Wild West” Industry
Previously, a 2018 report by the committee described the cryptocurrency industry as the “Wild West” — lawmakers did not say anything in subsequent inquiries that prompted them to change their ruling.
Following the release of the new report, the chair of the committee, Conservative MP Harriett Baldwin, said: “Effective regulation is clearly needed to protect consumers from harm and support productive innovation in the UK financial services sector.
“However, with no intrinsic value, huge price fluctuations, and no apparent social benefit, consumer transactions in cryptocurrencies like Bitcoin are more like gambling than financial services and should therefore be regulated.”
The MPs said they still believed the technology still had potential – for example by making payments more efficient and cost-effective – and recommended that the government take a “balanced approach” to supporting innovation.
The committee added that it was separately considering the potential role of central bank-backed digital currencies.
At the same time, its report criticized the government’s April 2022 Attempt to launch a non-fungible token (NFT) – a crypto asset – via the Royal Mint. The plan was abandoned earlier this year after a review.
The MP said the government “should seek to avoid diverting public resources to support crypto asset activities without a clear, beneficial use case”.
Encryption “provides opportunity”
The government is considering a response to consultations on its regulatory proposals.
A Treasury spokesman said ministers were likely to reject the committee’s recommendations.
They told Sky News: “The risks posed by crypto are typical of those present in traditional financial services, and financial services regulation – rather than gambling regulation – has a good track record of mitigating these risks.
“Cryptocurrencies present opportunities, but we are taking a nimble approach to robustly regulate markets, addressing the most pressing risks first in ways that foster innovation.”
The report comes as governments around the world face mounting pressure to better regulate the industry, while Crypto Platform FTX Sudden Bankruptcy November.
Around 80,000 UK clients affected by collapse, one UK investor There’s a £1m hole in his finances.
The European Union this week approved tougher rules for crypto assets — including new powers to ban exchanges that fail to protect consumers.
The International Organization of Securities Commissions (IOSCO), whose membership includes U.S. and U.K. regulators, said it would also soon announce proposals for the first global set of rules for crypto trading.