A cross-party panel of British lawmakers disagreed with the government’s position and recommended that trading of “unsupported” crypto assets such as Bitcoin and Ether be regulated as gambling. The recommendations came when the UK government was working to regulate cryptocurrencies as financial services.
House of Commons Committee a report Posted on Wednesday highlighted that cryptocurrencies are volatile, exposing traders to a high risk of losses, and as such, these tools are akin to gambling.
“The committee concluded that cryptocurrencies pose significant risks to consumers, due to their price volatility and the risk of losses. As retail trading in unbacked cryptocurrencies more closely resembles gambling than a financial service, MPs call on the government to regulate it as such,” mention the report.
Moreover, the committee is concerned that the British government’s classification of cryptocurrency trading as a financial service will create a “halo” effect, making consumers believe that digital currency trading is safe and secure.
Organized gambling
Gambling is legal in the United Kingdom. Both online and land-based gambling, including bingo and lottery halls, betting shops, online bookmakers and casinos, is regulated by the Gambling Commission under the Gambling Act 2005.
In addition, the UK allows spread bets, which are a type of financial derivative that allows you to bet on the future price of an asset. Although 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 HM Revenue & Customs, around 10 percent of adults in the UK own or hold crypto assets. Moreover, Chainalysis is ranked 17th in the UK Crypto Adoption Index.
“The events of 2022 have highlighted the risks to consumers posed by the crypto-asset industry, large portions of which remain in the wild West,” said Harriet Baldwin, chair of the Treasury Committee.
“With no intrinsic value, high price volatility, and no apparent social benefit, consumer trading in cryptocurrencies like Bitcoin is more like gambling than a financial service and should be regulated as such. By betting on these ‘tokens’ it is not Subsidized, consumers should be aware that all their money could be lost.”
Meanwhile, the commission acknowledged that decentralized technology “may bring benefits to financial services,” particularly in cross-border transactions and payments. Moreover, its criticisms did not include central bank digital currencies.
Lawmakers want the UK government to have a balanced approach in supporting the development of crypto-asset technologies but should not use public resources.
“It is not the government’s role to promote certain technological innovations for their own benefit,” the report added.
A cross-party panel of British lawmakers disagreed with the government’s position and recommended that trading of “unsupported” crypto assets such as Bitcoin and Ether be regulated as gambling. The recommendations came when the UK government was working to regulate cryptocurrencies as financial services.
House of Commons Committee a report Posted on Wednesday highlighted that cryptocurrencies are volatile, exposing traders to a high risk of losses, and as such, these tools are akin to gambling.
“The committee concluded that cryptocurrencies pose significant risks to consumers, due to their price volatility and the risk of losses. As retail trading in unbacked cryptocurrencies more closely resembles gambling than a financial service, MPs call on the government to regulate it as such,” mention the report.
Moreover, the committee is concerned that the British government’s classification of cryptocurrency trading as a financial service will create a “halo” effect, making consumers believe that digital currency trading is safe and secure.
Organized gambling
Gambling is legal in the United Kingdom. Both online and land-based gambling, including bingo and lottery halls, betting shops, online bookmakers and casinos, is regulated by the Gambling Commission under the Gambling Act 2005.
In addition, the UK allows spread bets, which are a type of financial derivative that allows you to bet on the future price of an asset. Although 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 HM Revenue & Customs, around 10 percent of adults in the UK own or hold crypto assets. Moreover, Chainalysis is ranked 17th in the UK Crypto Adoption Index.
“The events of 2022 have highlighted the risks to consumers posed by the crypto-asset industry, large portions of which remain in the wild West,” said Harriet Baldwin, chair of the Treasury Committee.
“With no intrinsic value, high price volatility, and no apparent social benefit, consumer trading in cryptocurrencies like Bitcoin is more like gambling than a financial service and should be regulated as such. By betting on these ‘tokens’ it is not Subsidized, consumers should be aware that all their money could be lost.”
Meanwhile, the commission acknowledged that decentralized technology “may bring benefits to financial services,” particularly in cross-border transactions and payments. Moreover, its criticisms did not include central bank digital currencies.
Lawmakers want the UK government to have a balanced approach in supporting the development of crypto-asset technologies but should not use public resources.
“It is not the government’s role to promote certain technological innovations for their own benefit,” the report added.
