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The UK Treasury Select Committee has suggested that the country regulate cryptocurrency trading as gambling rather than as a financial service.
On Wednesday, lawmakers said digital currencies such as bitcoin and ether “have no intrinsic value and serve no useful social purpose,” claiming they resemble gambling more than financial services, as informed of by British media outlet Sky News.
An influential panel of MPs has said that cryptocurrency trading and investing can be as addictive as gambling.
Acknowledging that the underlying blockchain technology could benefit the wider financial services industry, he added that the process of betting on the volatile price of unbacked cryptocurrencies could result in consumers losing life-changing cash.
“There is clearly a need for effective regulation to protect consumers from harm as well as support productive innovation in the UK financial services industry,” said Harriet Baldwin, Conservative MP and Chair of the Treasury Committee.
“However, with no intrinsic value, enormous price volatility and no apparent social good, consumer trading of cryptocurrencies such as bitcoin more closely resembles gambling than a financial service, and should be regulated as such.” “
The announcement comes after the UK Treasury said earlier this year It is set to deliver “ambitious plans to strengthen crypto asset activities on par with traditional finance”.
The UK government said at the time, “Under plans set out by the government today (1 February), it will seek to regulate a wider suite of cryptoasset activities, in line with its approach to traditional finance.”
However, lawmakers said a better approach would be to recognize that crypto assets are “closer to gambling than a financial service.” He recommended implementing security regulations for crypto firms that oversee the likes of lotteries, betting firms and casinos.
MPs said they were concerned that bringing the industry under financial services regulation would create “a ‘halo’ effect that leads consumers to believe this activity is safer than it is, or protected when it is not”.
He added that regulating cryptocurrencies as gambling would be in line with the government’s policy of “same risk, same regulatory consequence”.
The Treasury Select Committee is appointed by the House of Commons to scrutinize the expenditure, administration and policy of the UK Treasury, but does not have the power to set government policy.
Crypto Advocates Hit Back Against Committee Report
Some crypto associations and bodies have opposed the recent report of the Select Committee.
Ian Taylor, Board Advisor of Crypto UK, the UK’s self-regulatory trade association representing the crypto asset sector, Said The claims are “unhelpful, false, fundamentally flawed and baseless.”
“Professional investment managers view bitcoin and other cryptoassets as a new alternative investment class – not as gambling – and institutional adoption of unbacked crypto assets has increased significantly.”
The crypto guru also mentioned that the UK earned hundreds of millions of pounds in tax income from digital assets. But the government could lose this income if it regulates crypto as gambling as the latter is exempt from capital gains tax.