The UK Treasury Committee has released a report recommending that cryptocurrencies should be regulated as “gambling” due to their perceived risks and potential for fraudulent activities.
The committee argues that cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), lack intrinsic value, exhibit significant price volatility, and offer no discernible social benefits.
Harriett Baldwin MP, Chair of the Treasury Committee, expressed her view that consumer trading of cryptocurrencies resembles gambling more than a financial service and called for them to be regulated accordingly.
However, CryptoUK, the UK’s first self-regulatory trade association for the crypto industry, strongly disagreed with the committee’s stance and criticized their claims as unfounded and flawed.
Ian Taylor, Board Advisor at CryptoUK, countered the committee’s assertion by highlighting that professional investment managers view cryptocurrencies as a new alternative investment class, not as a form of gambling.
Taylor emphasized the increasing institutional adoption of unbacked crypto assets and argued that the committee’s statement failed to acknowledge the crypto industry’s true nature, purpose, and potential.
While acknowledging the existence of consumer risks in crypto trading, CryptoUK advocated addressing these concerns through education, awareness, and a more robust regulatory framework. Taylor deemed it unhelpful and untrue to equate crypto trading with gambling.
The committee’s report further pointed out that cryptocurrencies lack underlying asset backing, leading to substantial price volatility and a higher potential for major investment losses.
The MPs also expressed concerns that if retail crypto trading falls under financial service regulations, it could create a false sense of consumer safety.
The report highlighted recent events in the crypto industry, such as the collapse of FTX in 2022, as evidence of the risks posed to consumers in the largely unregulated crypto space. The committee described certain aspects of the crypto industry as a “wild west.”
According to HM Revenue & Customs data, approximately 10% of UK adults currently hold or have previously invested in cryptocurrencies.
The debate surrounding the regulation of cryptocurrencies continues to evolve, with differing perspectives on their intrinsic value, risk levels, and appropriate regulatory measures.
As stakeholders seek to strike a balance between consumer protection and fostering innovation, the future regulatory landscape for cryptocurrencies in the UK remains uncertain.
