Consumer trading in cryptocurrency should be regulated not as a financial service but as gambling.
So said the Treasury Committee composed of Members of Parliament (MPs) from a variety of parties in the United Kingdom in a new report, according to a press release issued Wednesday (May 17) by the U.K. Parliament.
The chair of the committee, Harriett Baldwin, said in the release that effective regulation is needed, both to protect consumers and to support innovation in the financial services industry.
“However, 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,” Baldwin said in the release. “By betting on these unbacked ‘tokens,’ consumers should be aware that all their money could be lost.”
The committee’s recommendations apply to unbacked crypto-assets, or cryptocurrencies, and it is considering central bank digital currencies (CBDCs) separately, the release said.
U.K. crypto-asset industry trade association CryptoUK responded to the report with a press release in which it said it rejects the “gambling” description and has not seen any other jurisdiction regulate crypto trading as gambling.
“The crypto and digital asset industry provides a wide and varied range of financial services, including investment vehicles and transactional mechanisms, and should be regulated accordingly,” CryptoUK said in the release. “Broadly, we advocate for a same risk, same regulatory approach methodology, whilst calling for nuanced regulation where appropriate as befits an innovative and evolving sector.”
The Treasury Committee’s report follows its inquiry launched in July into the role cryptocurrencies play in the U.K.
The committee said at the time of the opening of the inquiry that it would examine “opportunities and risks that crypto-assets may bring to consumers, businesses and the government (and associated bodies)” as well as the “potential impact of distributed ledger technology on financial institutions, including the central bank, and financial infrastructure.”
The release of the report comes about three months after the U.K. Treasury unveiled a proposal that would subject crypto companies to the same oversight as traditional finance firms.
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