The question of how to regulate cryptocurrencies has weighed on many countries as prices of digital assets soared in 2021, crashed in 2022, and remained volatile in 2023.
But the U.K., the world’s fifth-largest economy, may be heading in a different direction. Lawmakers that comprise the House of Commons Treasury Committee detailed their own view in a report published Wednesday: Regulate trading of cryptos from
Bitcoin
to
Ether
to smaller tokens like
Dogecoin
—like gambling.
“Unbacked cryptoassets have no intrinsic value, and their price volatility exposes consumers to the potential for substantial gains or losses, while serving no useful social purpose,” the members of Parliament wrote. “We therefore strongly recommend that the Government regulates retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial service.”
The key concern with regulating retail investor activity in crypto as a financial service, the lawmakers said, was that it would create a “halo effect”—leading consumers to believe the activity is safer than it is because of the regulatory regime it falls under.
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The lawmakers also targeted implicit government support for crypto, such as a now-abandoned plan for the Royal Mint to produce a nonfungible token. The government should “avoid expending public resources on supporting cryptoasset activities without a clear, beneficial use case,” the lawmakers said, adding “it is not the Government’s role to promote particular technological innovations for their own sake.”
Such a severe stance on crypto from members of Parliament seems to stand at odds with the U.K.’s ambition to position itself as an innovation hub and revamp financial rules in the post-Brexit era. It was Prime Minister Rishi Sunak, after all, as former Chancellor of the Exchequer, who espoused ambitions to make Britain a global crypto hub and directed the Mint to produce an NFT last year.
While it may say a lot about the state of U.K. politics, it probably says more about how fast the political appetite for crypto has waned over the past year.
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Write to Jack Denton at jack.denton@barrons.com
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