TL;DR:
- The UK House of Commons Treasury Committee suggests regulating crypto trading as gambling, overseen by the Gambling Commission and guided by the Gambling Act 2005. This includes preventing problem gambling, implementing safeguards, and taxing crypto trades as gambling.
- The committee acknowledges the efficiency of cryptocurrencies for international payments but warns about the risks associated with unbacked cryptoassets, considering them akin to gambling due to price volatility and speculative nature.
- Concerns are raised about potential misperception of safety if crypto trading is regulated as a financial service. The industry is disappointed with the report, as it contradicts the government’s previous proposal and could hinder the UK’s crypto aspirations. The government’s response and regulatory direction remain uncertain.
The United Kingdom’s House of Commons Treasury Committee has recommended regulating crypto trading as gambling, according to a new report. The proposal suggests that the Gambling Commission oversee crypto activities in the UK using the Gambling Act 2005 as a guide. This would involve providing advice and guidance to individuals and businesses to prevent problem gambling with cryptocurrencies, while implementing safeguards like anti-money laundering and counter-terrorist financing measures. Additionally, crypto trades would be taxed as gambling, with possible levies to support debt advice and addiction services.
The committee’s report expresses limited praise for cryptocurrencies, stating that the most convincing use case is improving the efficiency and reducing the cost of international payments. However, it warns about the risks associated with “unbacked cryptoassets” like Bitcoin and Ethereum, which it considers to have no intrinsic value and compares to gambling due to their price volatility and speculative nature.
The report raises concerns about consumer behavior and the potential misperception of safety or protection if retail trading and investment activity is regulated as a financial service. It argues that treating crypto trading and investment as gambling would ensure a consistent regulatory approach based on the principle of “same risk, same regulatory outcome.”
The industry’s initial response to the report has been negative, with some criticizing the classification of crypto as gambling and expressing disappointment in the claims made. Crypto trade associations and platforms emphasize that the report contradicts the government’s previous proposal to align crypto with existing financial regulations and hinder the UK’s aspirations to become a global hub for crypto asset technology.
The UK government had previously signaled its support for the crypto industry, aiming to establish the country as a global crypto asset technology hub. However, the Treasury Committee’s report has generated controversy within the industry, raising concerns about the government’s direction and conflicting regulatory approaches.
It remains to be seen how the UK government will respond to the Treasury Committee’s recommendations and whether it will adopt a more regulated approach to crypto trading akin to gambling. The outcome will have significant implications for the industry’s development in the UK and the potential impact on innovation, investment, and regulatory compliance within the crypto sector.
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