UK Treasury Rejects Proposal For Crypto To Be Regulated The Same As Gambling

The UK Treasury has rejected the proposals made by an all-party parliamentary committee regarding ranking crypto trading activities the same as gambling. The parliamentary committee had proposed that consumer trading for unbacked cryptocurrencies like Bitcoin and Ether be regulated the same as gambling.

UK Treasury rejects proposal for crypto be regulated like gambling

In May, the parliamentary committee questioned the plans being made by the government to regulate consumer trading the same as any other financial service. At the time, the committee argued that the move would have a ‘halo’ effect and result in consumers believing that the activity was safe and protected.

The chair of this committee, Harriett Baldwin, said that the events that happened last year had demonstrated the risks facing consumers that are operating within the digital asset industry. The committee chair noted that large parts of this industry remained to be a wild west. Baldwin noted that the industry posed a major risk to consumers.

“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,” Baldwin said.

However, the UK Treasury has said that it disagrees with the recommendations that have been made by the committee. The Treasury has argued that classifying crypto-assets according to what the committee recommended would risk a failure to meet international standards.

The UK Treasury has also said that the recommendations would likely result in unclear and overlapping mandates between the Gambling Commission and the financial regulators. It argued that this approach would not comply with the agreed-upon recommendations globally by international institutions and the agencies that set standards.

Some of the international bodies that would not match the strict approach of the all-party parliamentary committee include the International Organization of Securities Commissions and the G20 Financial Stability Board.

The Treasury responded that the recommendations were ground upon the principle of the same activity, same risk, and same regulatory outcome. As such, any crypto asset activity that conducted a similar function and posed the same risk could be regulated the same. These assets could be regulated in a similar manner to the assets offered in the traditional financial system to guarantee similar outcomes.

Changing crypto regulations globally

The global crypto regulatory framework has been shifting significantly. The UK Treasury noted that regulations in the gambling industry might fail to address the majority of critical risks lying in the sector. These risks include the ones stemming from market manipulation, inadequate arrangements, and deficiencies within the financial risk management industry.

An adequate regulatory framework for the financial services industry was needed to address the risks posed by unbacked digital assets and create the conditions needed to support innovation. The move will introduce the robust measures needed to mitigate consumer risks as per the proposals of the Committee.