Treasury Committee Calls for Regulation of Consumer Cryptocurrency Trading as Gambling
Bitcoin, Ether and other cryptocurrencies should be regulated as gambling given the significant risks they pose to consumers, a panel of UK lawmakers said in a report on Wednesday.
Bitcoin and Ether account for two-thirds of all crypto assets and are not backed by any currency or asset, leading to volatility in prices and the potential for all money invested in them to be wiped out, the report from parliament’s treasury committee said.
The Committee concluded that cryptocurrencies pose significant risks to consumers, given their price volatility and the risk of losses.
Given retail trading in unbacked crypto more closely resembles gambling than a financial service, the MPs call on the Government to regulate it as such.
The Committee is also concerned that regulating consumer crypto trading as a financial service – as proposed by the Government – will create a ‘halo’ effect, leading consumers to believe this activity is safe and protected, when it is not.
Around 10 per cent of UK adults hold or have held crypto assets, according to HM Revenue & Customs.
The MPs recognise that technologies underlying cryptoassets may bring benefits to financial services, particularly for cross-border transactions and payments in less developed countries, and call on the Government and regulators to keep pace with developments so potentially productive innovations are not unduly constrained.
Given the future benefits of crypto remain unclear, the Government should take a balanced approach to supporting the development of cryptoasset technologies and avoid spending public resources on projects without a clear, beneficial use, as appears to have been the case with its now-abandoned Royal Mint non-fungible token (NFT).
It is not the Government’s role to promote particular technological innovations for their own sake.