The volatility and aimed lack of intrinsic worth of utmost crypto assets make them particularly threatening to consumers, the politicians claimed.
The trading of so-called “ unbacked crypto assets ” similar to Bitcoin BTC $26,972 and Ether ETH $1,818 should be regulated as gambling rather than a financial service, a panel of British lawmakers spoke in a new report.
The United Kingdom is presently working on a crypto regulatory framework that would mix existing financial asset laws with new crypto-specific regulations.
Still, in a May 17 House of Commons Committee report, the U.K. Treasury Committee “ strongly recommended ” regulating retail crypto trading and investment activity as gambling, consistent with the principle of “ same threat, same regulatory outcome. ”
It argued the price volatility and lack of intrinsic value mean unbacked crypto assets will “ inevitably pose significant threats to consumers. ”
Treasury Committee Chair Harriett Baldwin described Bitcoin and Ether as accounting for two-thirds of the total market capitalization of crypto assets, both of which she declared is “ unbacked. ”
“We are concerned that regulating retail trading and investment activity in unbacked cryptoassets as a financial service will create a ‘halo’ effect that leads consumers to believe that this activity is safer than it is, or protected when it is not.”
In the U.K., all gambling — whether online or land- grounded is regulated by the Gambling Commission under the Gambling Act 2005. Its oversight includes businesses similar to bingo halls, lotteries, betting shops, online betting companies, and casinos, with the ambition to prevent problem gambling and apply Anti-Money Laundering securities.
In its arguments, the lawmakers referred to written statements from Dr. Larisa Yarovaya, an associate professor from the University of Southhampton, spoke crypto exchanges, online trading platforms, and different crypto-asset businesses should be regulated with equal stringency as crypto speculation “ can be addictive. ”
In a small victory for crypto, the committee spoke similarly and recognized the potential for some crypto assets and their underlying technology to bring advantages to financial services and markets similar to reducing the cost of cross-border payments and improving financial inclusion.
It spoke there should be an effective regulatory framework to support these developments in the U.K. while mitigating some of the threats associated with crypto assets.
“ We, thus, welcome the Government publishing offers for how it plans to regulate crypto assets utilized in financial services, ” the Committee wrote.
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Including Baldwin, who formerly served as the economic secretary to the Treasury, the committee consists of a whole of 11 members of Parliament from the Labor and Conservative bodies, as well as the Scottish National Party.
The committee spoke it had launched its inquiry into the crypto industry in July 2022 to explore the role of crypto assets in the U.K.
Research supervised by His Majesty’s Revenue and Customs (HMRC) — the nation’s tax authority — last year revealed 10 of U.K. citizens hold or have held crypto, with further than 55 having never sold any.
Chainalysis placed the United Kingdom 17th in its 2022 crypto adoption index.
(FELIX NG, Cointelegraph, 2023)