British MP Claims Crypto Trading Should Be Regulated Like Gambling

Twitter icon  •  Published 10ヶ月前  •  Nikolas Sargeant

The report claims those taking part in crypto taking should ‘should be aware that all their money could be lost.’

The UK's parliament Treasury committee has recommended regulating cryptocurrency trading as a form of gambling instead of a financial service. This recommendation came after conducting a new inquiry into the industry.

MPs have published a report warning the government to avoid wasting taxpayer funds on tech innovations like digital tokens. They have urged the government to demonstrate the benefits to the public before promoting such initiatives.

MPs have concluded that cryptocurrency trading and investing, like gambling, can be addictive. While the underlying blockchain technology can benefit the financial services industry, betting on the volatile price of unbacked assets such as bitcoin could lead consumers to lose significant amounts of money.

Harriett Baldwin, a Conservative MP, and chair of the Treasury committee, believes that effective regulation is necessary to protect consumers from harm and support productive innovation in the UK's financial services industry. Cryptocurrencies like bitcoin have no intrinsic value, exhibit huge price volatility, and offer no discernible social good. Due to these factors, consumer trading of cryptocurrencies is more like gambling than a financial service and should be regulated accordingly.

Consumers who bet on unbacked 'tokens' should know they risk losing their money. These recommendations may impact government decisions on cryptocurrency regulation, which are currently under consideration after a consultation earlier this year.

Many people have anticipated that cryptocurrency trading would eventually come under the Financial Conduct Authority's (FCA) jurisdiction. Currently, the FCA is responsible for ensuring that firms adhere to money-laundering regulations and will soon have the additional duty of monitoring adverts.

The Treasury Committee believes regulating cryptocurrency trading or investing as a financial service could create a false sense of security. This "halo effect" may lead consumers to believe that the industry is safer than it is or that they are protected from financial losses, which is not necessarily true.

The government's "same risk, same regulatory outcome" principle could be applied to regulating cryptocurrencies. The report suggests that considering cryptocurrencies as gambling would be consistent with this principle.

The government's attempt to create a non-fungible token through the Royal Mint was criticized in a recent report. NFTs are digital assets stored on a blockchain, the same ledger used for cryptocurrency transactions. However, the project was scrapped in March, almost a year after being announced. The Labour Party had previously called the project a "crypto gimmick."

The Treasury committee urges the government to take a balanced approach to technology and avoid spending public resources on crypto asset activities without a clear, beneficial use case. They point to the failed NFT project as an example. The committee believes the government should not promote technological innovations without a purpose.

Author

Nikolas Sargeant

Nik is a content and public relations specialist with an ever-growing interest in Crypto. He has been published on several leading Crypto and blockchain based news sites. He is currently based in Spain, but hails from the Pacific Northwest in the US.